What is the impact of US tariffs on China’s ＂green＂ products？

At the 2024 new york International Auto Show, people are watching the electric cars on display. Image source: Anthony Behar/Alamy

On May 14th, the U.S. government announced that it would substantially increase the tariffs on a series of products imported from China, most of which are aimed at "green" or low-carbon technology products. The tariffs will take effect on August 1st, including 100%, 25% and 50% tariffs on electric vehicles, lithium batteries and solar cells respectively. The affected categories of China goods include medical supplies, steel and aluminum products and marine cranes, and the importers will have to pay the established tax rate to the US government.

This tariff will reduce the competitiveness of related products and keep them out of the American market.

This not only marks the spread of tension between China and the United States to new areas, but also will have an impact on global energy transformation, climate diplomacy, Latin American manufacturing and trade relations, and the essence of technological development in the 21st century.

In this regard, Dialogue Earth interviewed experts from Europe, China and Latin America.

Belinda Schäpe

Independent expert and consultant on climate policy and China-EU relations in China.

Recently, the United States imposed tariffs on green technologies, marking a new stage in the Sino-US trade war, which may lead to a slower pace of energy transformation in the United States. People welcome healthy industrial competition, but the current policy of the United States may not achieve the expected results: despite the huge subsidies provided by the Inflation Reduction Act, the new tariffs will make the price of green technology in the United States more expensive, thus hindering global cooperation in tackling climate change. The EU should find its own way to deal with China’s dominant position in the field of green technology instead of shrinking on the issue of climate targets.

The EU needs to carefully strike a balance between the two goals of supply chain resilience and climate resilience. Hastily excluding China from the green technology supply chain will threaten the EU’s climate targets. In order not to affect its climate goals, the EU needs to take a pragmatic view of the threat posed by China’s green technology: although dependence on China may bring economic and strategic risks to some goods, it may not be the case for other categories. In order to ensure a smooth energy transition, it may be inevitable to rely on China to some extent in the short to medium term, especially considering China’s leading position in the international supply chain. To realize the diversification of these supply chains, it is inseparable from global partnerships, especially with developing countries around the world, which need to be supported by financial strength and innovation, rather than new tariffs.

With the escalation of tension between China and the United States, China-EU relations play an important role in maintaining the continuity of climate cooperation and diplomatic dialogue. China and the United States are about to start a confrontation in the field of green technology, which may affect global climate cooperation. If Trump is elected president of the United States for the second time, the United States may give up its climate commitment, and one of the few active working groups between China and the United States will also end. If Sino-US climate cooperation breaks down, the EU will have the responsibility to cooperate more closely with China to promote global climate action and urge China to fulfill its climate commitments. The EU should be prepared to maintain its position as a climate leader, and at the same time be cautious in dealing with trade tensions.

Yao Zhe (Yao Zhe)

Global Policy Advisor, Greenpeace East Asia Branch

On the occasion of the US election, President Biden’s decision to escalate the Sino-US trade dispute on green products is a risky bet. Being tough with China may win some voters’ votes and gain short-term political benefits, but it will also lose China’s trust in climate cooperation. China is expected to take countermeasures against the new tariffs, but the Sino-US climate dialogue will continue. However, if the green trade dispute continues to escalate, it may hinder the two countries from reaching any substantive climate cooperation action.

The China-US Climate Dialogue now has a new leader. John Podesta, the top climate diplomat in the United States, is also responsible for implementing the Inflation Reduction Act. His dual identity will inevitably bring closer the relationship between trade and climate dialogue, which will bring a severe test to the resilience of bilateral climate cooperation.

Climate is a special link to stabilize relations between the two countries in difficult times. However, the recent actions of the United States, including putting pressure on China with "overcapacity" and sharply increasing tariffs on electric vehicles and solar cells in China, have all released contradictory signals.

Competition may be the keynote of Sino-US relations for a long time to come. But that doesn’t mean that the two countries must be tit for tat in every aspect. On climate issues, even in green industries, the two countries still have good reasons to cooperate closely.

China enterprises are looking for opportunities to establish joint ventures and production centers in overseas markets, including the United States. This will help create jobs for the local area and promote economic growth. If Chinese and American enterprises are willing to cooperate, politics should not be an obstacle.

David Tyfield

Professor of Sustainable Transformation and Political Economy, Lancaster University

The new tariffs imposed by the United States on China’s electric vehicles show that more and more influential voices in the United States realize that the importance of electric vehicles is far more than a minor upgrade of long-standing automobile technology.

At present, we stand at the starting point of the social and technological evolution of electric vehicles. In the digital age, they are more and more likely to become "supercomputers on wheels". Therefore, electric vehicles are not only the core of the key travel industry and geopolitical competition in the 21st century, but also the key technology to shape the urban life style and the "good" vision in the future, which will further affect the global order and power.

In view of the fundamental mismatch between the current and emerging superpowers in terms of global outlook, it is not surprising that we see the competition around electric vehicles escalating and gradually moving towards "strategic decoupling". This kind of competition will not only involve the future form of electric vehicles, but also shape the future world in turn.

In the "Global Electric Vehicle Competition", the firm participation of the United States is welcome-not because of the speed of electric vehicle promotion, nor because American innovation is "better" in a sense, but because it has at least established a meaningful competition platform for the quality of electric vehicles. It also ensures the development track of this key technology, and will not only meet the needs of China by default.

However, this protectionist strategy risks being defeated by themselves. This is inevitable, and what is currently on the table is not the "best situation" of Sino-US cooperation-that is, a win-win strategy with the lowest risk.

Therefore, how this latest initiative affects the transformation of global sustainable travel depends on its complex details in the medium term. As the United States and China offer increasingly different and directly competitive electric vehicle visions, other countries (both of which need their markets) may balance them, thus producing positive global results. However, the opposite result may also occur, that is, due to the intensification of geopolitical division, the cycle of distrust slows down the popularization of electric vehicles and has a negative impact on this technology.

In a word, this tariff means that we have entered a new era. In this era of intensified global competition, it is possible to accelerate or slow down the popularization of electric vehicles; Only one thing is certain, that is, the electric vehicle industry will be more turbulent.

Jorge Heine

Professor, Pardee School of Global Studies, Boston University, and temporary director, Pardee Center for the Study of the Long-Range Future, Boston University.

This move by the United States may open the prelude to a large-scale escalation of the Sino-US trade war, and all countries in the region should be vigilant about this. Presidential candidate Trump has announced that if elected, he will impose a 10% tariff on all goods imported from the United States and a 60% tariff on goods imported from China.

Since the 1990s, Latin American countries, including Chile, Colombia, Peru and Uruguay, have been betting on increasing exports and promoting economic growth through free trade and access to the markets of China and the United States (the total economic output of the two countries accounts for 40% of the global GDP). They also bet on the right thing.

Now, the signal from Washington is that the era of globalization and open market is over. Protectionism prevails. In addition to electric vehicles, the United States also pointed its finger at other green renewable energy products such as batteries and solar panels. Latin America has many key commodities such as copper and lithium needed for green transformation. Therefore, these practices of the United States are particularly worrying for this region.

For many Latin American countries, it is the best choice to make use of these key commodities and increase their value, so as to realize the transformation of green economy, and to stimulate economic growth after another "lost decade". Latin American countries are eager to cooperate with China and the United States to promote the realization of this vision by developing tripartite relations-just as countries in this region did at the peak of commodity demand.

However, the signal from Washington is that this method is no longer feasible. The United States now completely gives priority to the domestic market, even if climate change and regional green transformation will be affected by it.

Enrique Dussel (Enrique Dussel)

Coordinator of China-Mexico Research Center, National Autonomous University, Mexico

In the past few years, we have experienced conflicts between China and the United States. Many people are talking about "near-shoring", "on-shoring" and "offshore". I want to add the term "security-shoring" to this dialogue, that is, to put the national security of the United States above trade and have a direct impact on third-party countries.

Recently, the United States hopes that third countries must adopt the same regulatory rules for China, that is, the "invest compete align" strategy adopted by the United States against China. "Collaboration" will affect third-party countries, because the United States is seeking third-party partners to fight against China with it; The United States hopes that Mexico can be consistent with the US security outsourcing strategy in all fields.

In terms of elections, Biden and Trump both agree with this, so the current competition between the two sides is who is tougher on China.