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THE LAST THING THE WORLD NEEDS is a trade war between the U.S. and China, but Washington is about to impose stiff new tariffs, perhaps as early as today. Treasury Secretary Janet Yellen said yesterday that the U.S. may face a “significant” retaliation.
A GROWING TRADE DISPUTE SEEMS LIKELY as President Biden prepares to impose new tariffs that will include a large hike — perhaps 100% — on levies for electric vehicles. The announcement also may target semiconductors, solar equipment and medical supplies.
BIDEN IS IN A FIERCE BATTLE with Donald Trump over which presidential candidate can be tougher against China, which is viewed by most analysts in the West as dumping products, slashing prices and approving massive subsidies.
BIDEN SEEMINGLY HAD GAINED the upper hand with organized labor after barnstorming through the crucial state of Pennsylvania earlier this spring, promising higher tariffs on steel and aluminum. Trump is expected to call for even stiffer penalties — and he’s considering a “weak dollar” strategy.
YELLEN SOUNDED DOWNBEAT YESTERDAY, stating that “hopefully we will not see a significant Chinese response. But that’s always a possibility,” she told Bloomberg Television in an interview.
WHILE YELLEN SAID SHE HOPES TO AVOID NEW TARIFFS, the U.S. says China engages in unfair practices. U.S. officials have cited the EV market, where China is ramping up production, flooding the market with cheap autos like the Seagull, which sells for around $12,000 in China, with a shorter-range version that sells for under $10,000.
BOTTOM LINE: Whether Biden wins or Trump wins, it appears that very rocky trade relations with China will persist, with rising tariffs that will run the risk of higher inflation and retaliation from both countries. This tense climate is likely to persist at least through the Nov. 5 U.S. election.
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