In-Depth: A New Round of U.S. Tariffs - Political Theater or the New Normal in Trade Wars? (AI Translation)
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文｜财新周刊 杜知航 卢羽桐 张而弛 罗国平 赵煊 翟少辉
By Caixin Weekly's Du Zhihang, Lu Yutong, Zhang Erchi, Luo Guoping, Zhao Xuan, Zhai Shaohui
“2000年，当来自中国的廉价钢铁涌入市场时，美国宾夕法尼亚州和俄亥俄州的钢铁城镇受到了沉重打击，1.8万多名钢铁工人失去了工作……我不会再让这种事发生了。”
"In the year 2000, when cheap steel from China flooded the market, steel towns in Pennsylvania and Ohio were severely impacted, and over 18,000 steelworkers lost their jobs... I won't let this happen again."
5月14日，在白宫的玫瑰花园，美国总统拜登在一群美国工会和企业代表面前发表上述演讲，自称是美国历史上最支持工会的总统。“中产阶级造就了美国，工会造就了中产阶级。”他说。
On May 14, in the Rose Garden of the White House, President Biden delivered the aforementioned speech before a group of American union and business representatives, proclaiming himself as the most pro-union president in U.S. history. "The middle class built America, and unions built the middle class," he stated.
当天清晨，白宫宣布对中国180亿美元的进口产品加征“301关税”。所谓“301”调查，即根据美国《1974年贸易法》第301条款采取行动。2017年8月，美国贸易代表办公室（USTR）向中国发起“301调查”，随后分四次对中国产品加征关税，涉及产品总额分别是340亿美元、160亿美元、2000亿美元和3000亿美元。拜登上任后，USTR在2022年末开始对特朗普时期的“301关税”进行四年期复审，而最新这批加征关税即为宣布复审结果。
That morning, the White House announced the imposition of "301 tariffs" on $18 billion worth of Chinese imports. The so-called "301" investigation refers to actions taken under Section 301 of the U.S. Trade Act of 1974. In August 2017, the United States Trade Representative (USTR) launched a Section 301 investigation into China. Subsequently, tariffs were imposed on Chinese products in four stages, with the total value of the products being $34 billion, $16 billion, $200 billion, and $300 billion, respectively. After Joe Biden took office, the USTR began a four-year review of the "301 tariffs" implemented during the Trump administration in late 2022, and the latest batch of tariffs was announced as a result of the review.
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- In a speech on May 14, President Biden announced the imposition of new "301 tariffs" on $18 billion worth of Chinese imports, significantly increasing tariffs on various products including steel, aluminum, semiconductors, and electric vehicles.
- The move is part of Biden's strategy to appeal to blue-collar voters in swing states ahead of the upcoming election and to reduce dependency on Chinese manufacturing by encouraging domestic production.
- Analysts suggest that while the immediate economic impact may be limited due to pre-existing trade measures and market expectations, the cumulative effect of these tariffs could further strain U.S.-China economic relations and potentially increase inflationary pressures in the U.S.
In 2000, Pennsylvania and Ohio faced a major economic blow when cheap Chinese steel poured into the market, putting over 18,000 steelworkers out of work. President Biden vowed to prevent such occurrences during his May 14 speech in the Rose Garden, touting himself as the most pro-union president in U.S. history and highlighting his administration's initiative to impose "301 tariffs" on $18 billion worth of Chinese imports [para. 1][para. 2]. The term "301 tariffs" stems from Section 301 of the U.S. Trade Act of 1974. In 2017, the United States initiated a Section 301 investigation into China, resulting in several rounds of tariffs on Chinese goods [para. 3][para. 4]. The recent tariff adjustments, which President Biden announced, include significant hikes affecting multiple sectors: steel and aluminum tariffs will jump to 25%, semiconductors to 50%, electric vehicles to 100%, and various other products will also see substantial increases [para. 5][para. 6].
A key element of this tariff strategy is its potential political payoff during the election season. Both Biden and his potential rivals, like Donald Trump, have toughened their stances on China, with Trump proposing a 60% tariff on all Chinese goods and Biden urging further increases on steel and aluminum tariffs to court blue-collar voters in swing states like Pennsylvania [para. 12][para. 13]. Analyst Liu Tianyi observed that Biden’s policies on China aim to attract Trump supporters, particularly lower to middle-income manufacturing workers [para. 14][para. 15].
Despite the psychological anticipation of these tariffs, their immediate economic impact remains limited. Nomura China points out that the affected products represent only a small portion of U.S. imports from China and an even smaller slice of China's exports. Moreover, some tariff implementations are staggered between 2025 and 2026 [para. 16][para. 17]. Analysts argue that these tariffs, in aggregate, might not heavily influence the U.S. and Chinese economies individually but do carry a high cumulative political cost for tariff reductions in the U.S. [para. 18][para. 19].
Domestic and global research institutions echo these concerns. Previous tariffs during the Trump era reportedly reduced U.S. real GDP by 0.2% to 0.4% while also harming employment, particularly because increased intermediate input costs outweighed any protective benefits to U.S. industries [para. 20][para. 21]. Goldman Sachs projected a potential 0.15% decline in U.S. GDP for every 1% tariff increase, hinting that repeated hikes could prompt significant economic repercussions [para. 22][para. 23].
At the macro level, the United States grapples with high deficits, interest rates, and inflation, raising concerns that additional tariffs could exacerbate these issues. Market attention remains on whether these measures will backfire by driving up U.S. inflation [para. 24][para. 25].
The impact extends to various sectors, including the new energy vehicle (NEV) industry. A 27.5% tariff on Chinese electric vehicles, compounded by Biden's recent measures, casts doubt on their competitiveness in the U.S. market. In 2023, Chinese NEVs exported to the U.S. were an inconsequential fraction of overall exports, and tariffs set for 2024 and beyond could further squeeze this supply chain [para. 33][para. 34]. Meanwhile, companies are shifting production overseas to mitigate these impacts, with countries like South Korea becoming key manufacturing hubs [para. 40][para. 41].
The implications of these tariffs are complex and multifaceted. China has denounced the measures as political manipulation, asserting they violate WTO regulations and contradict Biden's pledges to avoid suppressing China’s development [para. 54][para. 55]. As the landscape evolves, the move to intensify tariffs on China will likely continue shaping U.S. economic and electoral strategies, driving shifts in trade relations and domestic industrial policies [para. 56][para. 57].
- Sidley Austin LLP
盛德律师事务所 - Sidley Austin LLP is a law firm with a Washington D.C. office where Andrew W. Shoyer, former assistant general counsel at the USTR, is a partner. He advises that both Chinese and U.S. importers have limited opportunities to request exemptions from the newly imposed "301 tariffs" on Chinese imports. Sidley Austin also assists companies in navigating these complex tariff regulations.
- Policy Nexus
Policy Nexus（汇策） - Policy Nexus is a North American policy consulting company. Its CEO, Liu Tianyi, commented that Biden's handling of the Israel-Palestine conflict led to a loss of support from liberal, student, and minority voters. Thus, Biden's team now aims to appeal to Trump's supporters, particularly blue-collar workers in swing states like Pennsylvania, by increasing tariffs on Chinese products.
- Nomura
野村 - Nomura's research report indicates that the newly announced U.S. tariffs on Chinese products will affect goods valued at approximately 4.2% of U.S. imports from China and less than 1% of China's global exports. The report notes that some of these tariffs will take effect between 2025 and 2026, allowing exporters time to adjust.
- CITIC Securities
中信建投 - The article mentions that CITIC Securities summarized the U.S. tariff measures as "high tax rates, small scale, and fast processes, extending to upstream raw materials." There are concerns that the tariff approach could become a "new normal" in U.S. policy toward China, beyond mere political posturing.
- Fitch Ratings
惠誉评级 - Fitch Ratings Chief Economist Brian Coulton commented on U.S. tariffs, noting that while the Trump-era tariff increases were significant, Biden has not substantially reversed these measures. Coulton predicts that regardless of the 2024 election outcome, the U.S. is likely to implement more tariff increases on China in the future. Fitch Ratings has identified that Trump's tariffs decreased U.S. GDP by 0.2% to 0.4%.
- Goldman Sachs
高盛 - Goldman Sachs has projected that if Trump significantly raises tariffs on Chinese goods, each 1% increase in tariffs could cause a 0.15% decline in U.S. GDP. Even though the increased tariffs would raise fiscal revenue, they estimate a GDP drop of at least 0.05% and an increase in core consumer prices by over 0.1%.
- Photovoltaic Industry Companies
光伏行业公司 - Chinese photovoltaic industry companies like Longi Green Energy, Jinko Solar, and Trina Solar have significant overseas operations. They have shifted production to Southeast Asia to bypass high U.S. tariffs on China-made solar products. For instance, Longi Green Energy's U.S. joint venture's 5GW capacity began operating in Q1 2024. However, new U.S. tariffs and "anti-circumvention" measures might further disrupt their attempts to access the U.S. market.
- Rhodium Group
荣鼎集团 - Rhodium Group is a consulting firm that provided an analysis on the latest U.S. tariffs targeting Chinese imports, highlighting that batteries are the primary product affected. Their report indicates that 66% of the products subjected to the new tariffs, based on 2023 import data, comprise lithium-ion batteries or other battery components.
- Moody's
穆迪 - The article mentions that according to Moody's estimates, the previous round of U.S. tariffs on Chinese goods resulted in American consumers bearing 92% of the cost. This included an additional annual expenditure of $1300 per American household and caused greater disruption to global supply chains.
- Gotion High-Tech
国轩高科 - Gotion High-Tech, with Volkswagen China as its largest shareholder, plans to construct a 40 GWh battery cell factory in the U.S. The company aims to navigate trade barriers by establishing a local presence, fostering competitiveness in the American market.
- Envision AESC
远景动力 - Envision AESC, formerly known as Nissan AESC, was acquired by China's Envision Group in 2019 and serves as its power battery subsidiary. The company plans to produce electric vehicles in the U.S., starting with the Polestar 3 at its new South Carolina plant. Envision AESC aims to meet increasing U.S. demand for batteries and electric vehicles.
- EVE Energy
亿纬锂能 - EVE Energy, a producer of lithium batteries, currently does not have direct exports of its products to the U.S. However, it is preparing for future demand by establishing a factory in Malaysia, which is expected to support deliveries to U.S. customers by 2026. The company aims to enhance its competitive edge by having overseas production capabilities to mitigate the impact of tariffs.
- LG Energy Solution
LG新能源 - LG Energy Solution is a South Korean energy company and one of the leading producers of lithium-ion batteries globally. It has been significantly expanding its presence in the U.S. market. Following new U.S. tariffs on Chinese batteries, LG Energy Solution is expected to increase its market share in the U.S. due to its existing production facilities and plans to ramp up production of lithium iron phosphate (LFP) batteries there.
- SK Innovation
SK Innovation - SK Innovation (KRX: 096770) is a South Korean company involved in the battery industry. It has production facilities in China. The company is poised to expand its presence in the U.S. market, especially by accelerating the production of lithium iron phosphate (LFP) batteries in response to increased tariffs on Chinese imports and to gain market share.
- Panasonic
松下 - The article mentions that Panasonic is one of the leading companies in the U.S. battery sector. As of 2023, Panasonic, along with Tesla, SK Innovation, and LG Energy Solution, spearheaded U.S. battery production. Much of the discussed capacity expansion in America relates to advanced battery technologies and localization efforts to reduce dependence on Chinese imports.
- Samsung
三星 - Samsung is involved in the global battery supply chain, with its business activities affected by U.S. tariffs. The company's operations include having its battery products exported from China to the U.S. as indicated in China's battery export data, which also includes exports from Samsung's facilities in China. Additionally, South Korean battery firms, including Samsung, are positioned to benefit from increased relative advantages in the U.S. market due to the new tariffs on Chinese batteries.
- Tesla
特斯拉 - Tesla is significantly impacted by U.S. tariffs: in 2023, it accounted for over a third of China's electric vehicle exports. Resulting from the U.S. Inflation Reduction Act, Tesla’s China-made vehicles also can't benefit from U.S. subsidies. Most of Tesla’s China production is now directed to markets outside the U.S.
- JinkoSolar
晶科能源 - JinkoSolar has invested in establishing production facilities in Southeast Asia, such as in Malaysia and Vietnam, to bypass higher tariffs imposed by the U.S. on Chinese-made solar products. This strategy has allowed the company to maintain its market presence in the U.S. despite trade restrictions.
- CATL
宁德时代 - CATL, a leading Chinese battery manufacturer, currently has no direct exports of power batteries to the United States. They have, however, preemptively planned a factory in Malaysia to support U.S. client deliveries by 2026, leveraging overseas facilities to mitigate tariff impacts.
- ASE Technology
日月光 - ASE Technology, also known as Advanced Semiconductor Engineering (ASE), is the world's largest provider of independent semiconductor manufacturing services in assembly and test. Amidst the U.S.-China trade tensions and tariff impositions, ASE has been involved in shifting some of its operations to reduce exposure to U.S. tariffs on Chinese goods, potentially impacting their business strategies and operational footprint.
- Wise Road Capital
智路资本 - Wise Road Capital, based in China, acquired four semiconductor plants from ASM Pacific Technology in December 2021 for $1.46 billion. The move aimed to strengthen China's semiconductor manufacturing capability amidst the ongoing U.S.-China trade tensions and technology competition.
- King Yuan Electronics
京元电子 - King Yuan Electronics, a semiconductor testing company, has sold its sole Chinese testing subsidiary, Jinglong Technology, to domestic buyers Tongfu Microelectronics. This move is seen as a response to trade tensions and tariff impacts from the U.S., highlighting a shift in the company's strategy to mitigate geopolitical risks.
- Tongfu Microelectronics
通富微电 - Tongfu Microelectronics, a Chinese company, was mentioned in the context of the semiconductor industry. In April 2024, it was noted that a semiconductor testing company, King Yuan Electronics, sold its China-based testing subsidiary to buyers including Tongfu Microelectronics. This move is part of a trend where companies are selling their mainland China-based semiconductor facilities due to trade tensions and tariffs.
- Xiaomi
小米 - The article does not mention Xiaomi. It primarily discusses the U.S.-China trade tensions, focusing on tariffs, particularly in steel, aluminum, and the technology sector, as well as various economic impacts and strategies of both nations.
- Bosch
博世 - The article mentions Bosch's China President, Xu Daquan, who has warned multiple times in 2023 about the insufficient investment in mature process chips, which are essential for the development of electric vehicles. Xu indicated that nearly 96% of automotive chips use mature process technology, and he expressed concerns about a potential chip shortage that could impede the advancement of electric vehicles globally.
- Shanghai Zhenhua Heavy Industries Co., Ltd (ZPMC)
振华重工 - Shanghai Zhenhua Heavy Industries Co., Ltd (ZPMC) is the world's largest port crane manufacturer, holding a 70% market share. It has been supplying port cranes to the U.S. for nearly 30 years without security issues. Recently, U.S. authorities conducted hearings alleging cybersecurity concerns with ZPMC’s cranes, leading to an increased tariff from 0% to 25% on Chinese port cranes.
- Micron Technology
美光 - The article does not specifically mention Micron Technology. It focuses on the impact of U.S. policies, like the "301 tariffs," on Chinese imports in various sectors, including steel, aluminum, solar energy, and electric vehicles. For information on Micron Technology, additional sources would be needed.
- TSMC
台积电 - The article mentions that numerous Chinese Taiwanese semiconductor companies, including TSMC (Taiwan Semiconductor Manufacturing Company), have faced pressure due to U.S. tariffs on Chinese-made semiconductors. This led to strategic decisions, such as selling off their mainland Chinese plants, to mitigate tariff impacts and maintain competitive advantage in the global market.
- Intel
英特尔 - Intel has received subsidies from the U.S. government under the "CHIPS and Science Act" primarily for the construction of advanced process wafer fabs. This investment aims to reduce reliance on foreign supply chains and strengthen domestic semiconductor manufacturing capabilities. However, much of the new U.S. capacity is focused on more advanced processes, while China's new capacity primarily targets mature processes like 28nm.
- Citibank
花旗 - The article does not mention Citibank. It discusses the U.S. imposing additional tariffs on Chinese imports, affecting various industries including steel, aluminum, and electric vehicles. The focus is on the economic and political implications of the tariffs and the significant impact on both U.S. and Chinese economies, as well as global supply chains.
- Postal Savings Bank of China
邮储银行 - The article content does not mention anything about the Postal Savings Bank of China. It primarily discusses the impacts of U.S. tariffs on imports from China across various sectors, focusing on steel, aluminum, electric vehicles, and other industries, as well as the geopolitical and economic implications of these tariffs.
- UBS SDIC Fund Management
国投瑞银 - The article does not contain any information regarding UBS SDIC Fund Management. It focuses on the U.S. trade policies towards China, including tariffs and their impact on various industries, especially in the context of the upcoming presidential election.
- ICBC Credit Suisse
工银瑞信 - The article does not mention ICBC Credit Suisse. It primarily discusses U.S. tariffs on Chinese imports, the impact on various industries including steel, aluminum, automotive, and silicon photovoltaics, and broader economic and political implications of these measures.
- Industrial Global Fund
兴业全球基金 - The article does not mention or provide information about an "Industrial Global Fund." It focuses on U.S. tariffs on Chinese imports and the implications for various industries, notably steel, aluminum, semiconductors, electric vehicles, and solar energy, among others. If you have any other questions or need further information, please let me know.
- Hongda Co., Ltd.
宏达股份 - The article content does not provide any specific information or mention Hongda Co., Ltd.
- Zhengbang Group
正邦集团 - The article does not provide any information about Zhengbang Group. It focuses on the United States' increased tariffs on various Chinese imports, including steel, aluminum, semiconductors, electric vehicles, and other products. The context revolves around U.S.-China trade relations and the political and economic implications of these tariff changes.
- Shuanghui Development
双汇发展 - The article does not mention Shuanghui Development. It focuses on the U.S. increasing tariffs on Chinese imports due to ongoing trade tensions and political considerations, impacting various industries including steel, aluminum, semiconductors, electric vehicles, and more.
- Muyuan Co., Ltd.
牧原股份 - The article content does not provide any information about Muyuan Co., Ltd. If you need details about Muyuan Co., Ltd., please provide more context or refer to another source.
- New Hope Liuhe
新希望六和 - The article content does not mention New Hope Liuhe. The focus of the article is on U.S. tariffs on Chinese imports and the economic and political implications for various industries, including steel, aluminum, and solar products, among others.
- Bright Dairy & Food Co., Ltd.
光明乳业 - The article doesn’t mention Bright Dairy & Food Co., Ltd. If you need specific information about the company, it would be best to consult a relevant source or provide additional context.
- Inner Mongolia Yili Industrial Group
伊利股份 - The article content does not contain any information about Inner Mongolia Yili Industrial Group. The focus is on the imposition of "301 tariffs" by the U.S. on Chinese imports, including sectors like steel, aluminum, electric vehicles, and solar products, and the broader economic implications.
- China Mengniu Dairy Company Limited
蒙牛乳业 - The article does not contain any information about China Mengniu Dairy Company Limited. It focuses on the U.S. tariffs on Chinese imports, particularly in sectors like steel, aluminum, semiconductor, and electric vehicles, and their implications on U.S.-China trade relations.
- CR Snow
华润雪花 - The article does not mention CR Snow. CR Snow is a Chinese brewing company, known for producing Snow Beer, one of the best-selling beer brands in the world.
- Tsingtao Beer
青岛啤酒 - The article does not mention Tsingtao Beer.
- Yanjing Beer
燕京啤酒 - The article content provided does not mention Yanjing Beer. It primarily discusses U.S. tariffs on Chinese imports, including various sectors such as steel, aluminum, semiconductors, electric vehicles, and solar energy products, as well as the political and economic implications of these tariffs in the context of U.S.-China trade relations.
- Chongqing Brewery
重啤 - The article does not contain any information about Chongqing Brewery. It focuses on the U.S. imposing increased tariffs on Chinese imports, the implications on various industries, and the geopolitical and economic strategies of the U.S. and China.
- HSBC
汇丰银行 - The article does not mention HSBC. It focuses on U.S. tariffs on Chinese imports, the impact on various industries like steel, aluminum, and electric vehicles, and the political and economic ramifications of these tariffs.
- Dong'e Ejiao
东阿阿胶 - The article does not contain information about Dong'e Ejiao. It primarily discusses U.S. tariffs on Chinese imports, economic impacts, and political implications related to trade policies.
- Pian Zai Huang
片仔癀 - The article does not mention Pian Zai Huang. It focuses on the U.S. increasing tariffs on Chinese imports, discussing the economic and political motivations and implications of this policy. Key affected industries include steel, aluminum, semiconductors, electric vehicles, lithium-ion batteries, and solar energy products.
- Kangmei Pharmaceutical
康美药业 - The article does not contain any information about Kangmei Pharmaceutical. It focuses on U.S.-China trade relations, particularly with regard to tariffs imposed by the U.S. on various Chinese products.
- Dongyang Guang Pharmaceutical
东阳光药 - The article content does not contain any information about Dongyang Guang Pharmaceutical.
- Baiyunshan
白云山 - The article does not contain any information about Baiyunshan. It focuses on U.S. President Biden's imposition of increased tariffs on Chinese imports, the specific products affected, potential impacts on the U.S. economy and Sino-American trade relations, as well as how various industries are reacting to these changes.
- Harbin Pharmaceutical Group Co., Ltd.
哈药股份 - The article does not mention Harbin Pharmaceutical Group Co., Ltd. Therefore, no specific information about the company can be extracted from this content.
- Tasly Holding Group
天士力 - The provided article does not mention Tasly Holding Group. Therefore, there is no relevant information about this company in the article content.
- XiuZheng Pharmaceuticals Group
修正药业 - The article content does not mention XiuZheng Pharmaceuticals Group. It primarily discusses the impact of the U.S. imposing "301 tariffs" on Chinese products, focusing on sectors like steel, aluminum, electric vehicles, and solar energy.
- Yangzijiang Pharmaceuticals
扬子江药业 - The article does not mention anything about Yangzijiang Pharmaceuticals. Therefore, there is no relevant information about this company in the provided text.
- Guangzhou Pharmaceutical Holdings Limited
广药集团 - The provided article does not mention Guangzhou Pharmaceutical Holdings Limited. It focuses on US-China trade relations, tariffs, and the impact on various industries and products.
- CR Sanjiu
华润三九 - The article content does not mention CR Sanjiu.
- YIXINTANG
一心堂 - The article does not mention YIXINTANG. Instead, it focuses on U.S.-China trade relations, particularly the increased tariffs imposed by the U.S. on various Chinese imports, such as steel, aluminum, electric vehicles, and batteries. The tariffs are part of broader economic and political strategies in the context of upcoming U.S. elections and ongoing trade tensions.
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