Washington is expecting a “significant” Chinese retaliation from Beijing after the expected announcement of punitive American tariffs on Chinese made electric vehicles (EVs) today, according to Treasury Secretary Janet Yellen.
“Hopefully we will not see a significant Chinese response. But that’s always a possibility,” Yellen told Bloomberg TV on Monday.
According to sources cited by Reuters, the impending tariffs on Chinese could be as high as 100 percent. New tariffs on Chinese-made semiconductors, solar equipment and medical equipment are also anticipated.
China has been assiduously developing its EV industry for years, spotting an opportunity to overtake makers of vehicles that run on fossil fuels and challenge Western countries that have traditionally dominated high-tech and automobile manufacturing.
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However, Washington accuses China of “flooding” world markets with cheap products, even though the average utilisation rate at Chinese factories was less than 74 percent during the first quarter, compared to global norms of 76 to 80 percent. The utilisation rate at many of China’s EV factories is less than 60 percent.
The expected tariffs are seen as a popular “China bashing” move by the US president, who is facing a reelection campaign, but could have limited impact on the Chinese EV industry, which sells very few cars in the US.
During the last quarter, only Geely exported its products to America, selling just over 2,200 vehicles. Chinese EVs also sell for three to four times less than their American counterparts, meaning that they will be competitive even with tariffs.
Beijing says US crackdowns on its goods are counterproductive, causing harm to both US consumers and the global economy. During US Secretary of State Antony Blinken’s recent visit to Beijing, Foreign Minister Wang Yi urged the US to lift sanctions on Chinese companies and to stop imposing punitive tariffs.
