The Guardian • Issue #2100

Biden anti-China tariffs threaten global economy

Containers at wharf.

Photo: Chuttersnap – Freerange Stock. (C00)

US President Biden has announced a range of tariffs on imported Chinese goods. It is a decision that will have negative implications for the USA’s consumers, workers, and the global economy. Capitalism is launching a new round of economic warfare aimed at China. The global economy sinks or swims on its capacity to trade. Biden’s decision will end up hurting his people and global capitalism. It also has direct implications for the capacity to reduce global emissions and to clean the planet. His tariffs are largely aimed at imports that directly reduce carbon emissions.

The new tariffs are aimed at a range of imports from China worth $18 billion. These include Chinese steel and aluminium, semiconductors, electric vehicles (EVs), lithium batteries, critical minerals, solar cells, port cranes, and personal protective equipment.

Tariffs on Chinese EVs will rise from the present 25 per cent to 100 per cent. The import tax on Chinese solar cells and semiconductors will also double, from 25 per cent to 50 per cent.

Biden’s dangerous decision elevates hypocrisy to statecraft. The tariffs add to those put in place by former president Trump. When Trump engaged in trade war politics, Biden described the move to raise import tariffs as a mistake that would inevitably lead to price rises. Trump lifted tariffs by only 10 per cent!

There are two strings to this new economic policy. One is set to appeal to a domestic audience. Biden is struggling in his election campaign. The other is to continue the ‘war by any means’ approach against China. What remains an absolute priority, regardless of cost, is the campaign to limit China’s growth.

Biden pitched the idea as being pro-worker, or at least, pro-American worker. He assembled representatives from businesses and unions, and proclaimed that “American workers can out-work and out-compete anyone as long as the competition is fair, but for too long it hasn’t been fair …  We’re not going to let China flood our market.”

The second twisted string is his announcement of an intensification of a trade war with China. This can so easily end badly. In an interview with Bloomberg, Treasury Secretary Janet Yellen said that “hopefully, we will not see a significant response – but it’s always a possibility.” Is the answer, then, to simply ‘hope for the best?’ It’s a dangerous strategy.

There is an assumption, not a terribly realistic one, that China’s response will be muted. The Chinese Foreign Ministry urged the US to follow WTO rules and immediately cancel new tariffs on Chinese products. Significantly it promised to take ‘all necessary measures to defend Chinese interests.’

China’s Foreign Minister, Wang Yi, was quick to denounce the American measure. He said that America’s ‘relentless crackdown measures amounted to typical bullying, exposed Washington’s lack of confidence rather than strength, and will not stop China’s development.’

Foreign Ministry spokesperson, Wang Wenbin, stated that the United States’ “unscrupulous efforts to suppress China do not prove US strength, but expose that it has lost confidence and become confused,” adding that the tariffs “cannot prevent China’s development and revitalisation, but will instead inspire the 1.4 billion Chinese people to work harder.”

Wang Wenbin also pointed out that Biden was maintaining the economic policies of Trump. The WTO has already ruled that these tariffs are in violation of global trade rules. He urged the US to “earnestly observe WTO rules and immediately cancel the additional tariffs.” China will take “all measures necessary to defend our rights and interests.”

The Chinese are rightly angry at what amounts to an act of economic sabotage, if not economic war. Significant sections of global capital are no less concerned. Manuel Menendez, of MCM Group Holdings, whose company has long engaged with China made the point that “history will show punitive tariffs ultimately do not work … US consumers will pay more and onerous import tariffs contribute to inflation … this announcement today sets the stage for a tit-for-tat response from China and a more aggressive trade war.”

It has been shown that the trade war, initiated by Trump, harmed the global economy.

Any further escalation can only make things worse. US ratings agency Fitch released a report that indicated any serious escalation of US tariffs would see GDP shrink by as much as 0.8 per cent. They also predict that if there was any retaliation, then the impact could rise to 1.1 per cent.

Former director of the Institute of World Economic Studies at the China Institute of Contemporary International Relations, Chen Fengying, described the US move as a “relatively big blow to the world economy, global trade, and international economic governance.” He noted that the American move simply makes global tensions worse, damages global economic confidence and could easily lead to an increase in conflict and division.

According to International Monetary Fund (IMF) reports, there are indications of a slow global economic recovery. The emphasis is on slow. US GDP growth rates are predicted to be about 2.7 per cent. The global rate is set to be around 3.2 per cent, and China’s about 5 per cent for this year. The IMF has a habit of revising its predictions and this is usually a downward revision. The economy is inevitably brittle.

This makes Biden’s tariff attack a reckless one. In a desperate bid to maintain US global hegemony and to capture a second term in the White House, he is prepared to commit economic sabotage.

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