Beijing, China:

Donald Trump is back in the White House, promising to use the United States’s vast economic weight to hit back at China for its alleged unfair trade practices and role in the deadly American fentanyl crisis.

This week, the mercurial magnate said 10 percent tariffs on all Chinese imports could kick in on February 1 — and on the campaign trail touted a levy as high as 60 percent.

China has warned that there are “no winners” in a trade war and vowed to defend its economic interests.

Here’s where the China-US trade relationship stands:

How much trade is at stake?

Trade between China and the United States — the world’s two largest economies — is vast, totalling more than $530 billion in the first eleven months of 2024, according to Washington.

Over that same period, sales of Chinese goods to the United States totalled more than $400 billion, second only to Mexico.

According to the Peterson Institute of International Economics (PIIE), China is the dominant supplier of goods from electronics and electrical machinery, to textiles and clothing.

But a yawning trade imbalance — $270.4 billion for January to November last year — has long raised hackles in Washington.

As has China’s vast state support for its industry, sparking accusations of dumping, as well as its perceived mistreatment of US firms operating in its territory.

But China’s economy remains heavily reliant on exports to drive growth despite official efforts to raise domestic consumption — making its leaders reluctant to change the status quo.

What happened during Trump’s first term?

Trump stormed into the White House in 2016 vowing to get even with China, launching a trade war that slapped significant tariffs on hundreds of billions of dollars of Chinese goods.

China responded with retaliatory tariffs on American products — particularly affecting US farmers.

Key US demands were greater access to China’s markets, broad reform of a business playing field that heavily favours Chinese firms, and a loosening of heavy state control by Beijing.

After long, fraught negotiations the two sides agreed what became known as the “phase one” trade deal — a ceasefire in the nearly two-year-old trade war.

Under that agreement, Beijing agreed to import $200 billion worth of US goods, including $32 billion in farm products and seafood.

But in the face of the pandemic and a US recession, analysts say Beijing fell well short of that commitment.

“In the end, China bought only 58 percent of the US exports it had committed to purchase under the agreement, not even enough to reach its import levels from before the trade war,” PIIE’S Chad P Brown wrote.

“Put differently, China bought none of the additional $200 billion of exports Trump’s deal had promised.”

How did things change under Biden?

Trump’s successor Joe Biden did not roll back increases imposed by his predecessor, but took a more targeted approach when it came to tariff hikes.

Under Biden, Washington expanded efforts to curb exports of state-of-the-art chips to China — part of a broader effort to prevent sensitive US technologies being used in Beijing’s military arsenal.

His administration has also used tariffs to take aim at what it called China’s “industrial overcapacity” — fears the country’s industrial subsidies for green energy, cars and batteries could flood global markets with cheap goods.

Last May, Biden ordered $18 billion worth of imports from China be slapped with tariffs, accusing Beijing of “cheating” rather than competing.

Under the hikes, tariffs on EVs quadrupled to 100 percent, while the tariff for semiconductors will surge from 25 percent to 50 percent.

The measures also targeted strategic sectors such as batteries, critical minerals and medical products.

Both sides have also launched investigations into the others’ alleged unfair trade practices with probes into dumping and state subsidies.

What happens next?

With Biden gone, all eyes are on whether Trump will follow through on these threats — or if the rhetoric was an opening gambit in negotiations.

Trump has long viewed tariffs as a bargaining tool — an “all-purpose bludgeon”, according to a Wall Street Journal editorial.

He has also tied tariffs to the fate of Chinese-owned social media app TikTok — warning of retaliation if a deal cannot be struck to sell it.

Many breathed a sigh of relief when a “shock and awe” blitz of executive orders signed on Trump’s first day in office did not feature tariffs on Chinese goods.

But Trump did order a sweeping review by top officials into a number of Chinese trade practices — with reports due by April 1.

“Although no immediate tariff hike is an upside surprise, extended uncertainty may still weigh on confidence,” HSBC economists wrote in a note Wednesday.

“That said, the lack of concrete tariffs at this juncture may suggest that Trump is open to further negotiations with China,” they added.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

Donald Trump’s victory in the 2024 election – and his threat to impose tariffs on all imports to the United States – highlights an important problem for the global economy.

The US is a technological powerhouse, spending more than any other country on research and development and winning more Nobel prizes in the last five years than every other country combined. Its inventions and economic successes are the envy of the globe. But the rest of the world needs to do everything in its power to avoid being too dependent on it.

And this situation would not have been much different had Harris won.

The “America first” approach of Donald Trump has actually been a bipartisan policy. At least since previous president Barack Obama’s policy of energy independence, the US has been on a mostly inward-looking quest of maintaining technological supremacy while ending the offshoring of industrial jobs.

One of the major choices Trump made in his first term was to accept higher prices for US consumers in order to protect national producers by slapping high tariffs on almost every trading partner.

For instance, Trump’s 2018 tariffs on washing machines from all over the world mean US consumers have been paying 12% more for these products.

President Joe Biden – in certainly a more polite way – then increased some of the Trump tariffs: up to 100% on electric vehicles, 50% on solar cells and 25% on batteries from China.

At a time of climate emergency, this was a clear choice to slow down the energy transition in order to protect US manufacturing.

While Biden signed a truce with Europe on tariffs, it started a perhaps even more damaging battle by launching a subsidy race.

The US Inflation Reduction Act for instance contains US$369 billion (£286 billion) of subsidies in areas such as electric vehicles or renewable energy. And the Chips Act committed US$52 billion to subsidise the production of semiconductors and computer chips.

China, Europe and the rest of the world

This US industrial policy might have been inward-looking, but it has clear consequences for the rest of the world. China, after decades of mostly export-based growth, must now deal with massive problems of industrial overcapacity.

The country is now trying to encourage more domestic consumption and to diversify its trading partners.

Europe, despite a very tight budget constraint, spends a lot of money in the subsidy race. Germany, a country facing sluggish growth and big doubts on its industrial model, is committed to matching US subsidies, offering for instance €900 million (£750 million) to Swedish battery makers Northvolt to continue producing in the country.

All those subsidies are hurting the world economy and could have easily financed urgent needs such as the electrification of the entire African continent with solar panels and batteries. Meanwhile, China has replaced the US and Europe as the largest investor in Africa, following its own interest for natural resources.

The incoming Trump mandate might be a chance to fix ideas.

One might, for instance, argue that the full-scale invasion of Ukraine, and the thousands of deaths and the energy crisis that followed, could have been avoided had the Biden administration been clearer to Russian president Vladimir Putin about the consequences of an invasion, and provided modern weapons to Kyiv before the war.

But the blame is mostly on Europe. Credit where it’s due, the strategic problem of becoming too dependent on Russian gas is something Trump had clearly warned Germany about during his first mandate.

There is a clear path forward: Europe could help China fix its overcapacity problems by negotiating an end to its own tariff war on Chinese technology such as solar panels and electric cars.

In exchange, Europe would regain some sovereignty by producing more of its own clean energy instead of importing record amounts of liquid gas from the US. It could also learn a few things from producing with Chinese companies, and China could use its immense leverage on Russia to end the invasion of Ukraine.

The European Union could also work harder on what it does best: signing trade deals, and using them as a way to reduce carbon emissions around the world.

This is not only about Europe and China. After decades of continuous improvement on all major dimensions of human life, the world is moving backwards.

The number of people facing hunger is increasing, taking us back to the levels of 2008-9. War is raging in Gaza, Sudan, Myanmar, Syria, and now Lebanon. The world had not seen as many civilian casualties since 2010.

For better or worse, it is unlikely that a Trump administration will reverse the path of lower US interventionism. It is also unlikely to lead any major initiative on peace, climate change or on the liberalisation of trade.

The world is alone, and America will not come to save it.

We do not know what will happen to the US. Maybe the return of Trump will mostly be a continuation of the last ten years. Maybe prohibitive tariffs or destroying the institutions that made the US such an economic powerhouse will make the US economy less relevant. But this is something Americans have chosen, and something the rest of the world simply has to live with.

In the meantime, the only thing the world can do is learn how to better work together, without becoming too dependent on each other.

(Author: Renaud Foucart, Senior Lecturer in Economics, Lancaster University Management School, Lancaster University)

(Disclosure Statement: Renaud Foucart does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment)

This article is republished from The Conversation under a Creative Commons license. Read the original article.
 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Beijing:

China announced on Friday new curbs on exports of certain types of graphite, key to making batteries for electric vehicles, days after the United States slapped fresh restrictions on outflows of high-tech microchips.

Washington said this week it would ramp up restrictions on exports of cutting-edge semiconductors crucial for powering artificial intelligence systems — its latest effort to curb Beijing’s access to advanced tech.

China has branded Washington’s policy unfair and has imposed its own measures, declaring in July that certain products containing gallium and germanium — key raw materials for chipmaking — would be subject to stricter export controls.

And under measures unveiled Friday by the Ministry of Commerce, exporters must apply for permits to sell two types of graphite to foreign customers.

“Based on the need to uphold its national security and interests, China has implemented export controls on certain graphite items in accordance with the law,” the ministry said.

Graphite is commonly used to make lithium-ion batteries for mobile phones, electric vehicles (EVs) and other products.

China was the world’s leading graphite producer last year, accounting for an estimated 65 percent of total production, according to the United States Geological Survey.

The export controls will include high-purity, high-strength and high-density graphite material; and natural flake graphite.

Three further kinds of “highly sensitive” graphite materials included in the list were already under temporary curbs, according to the announcement.

Global graphite consumption is expected to soar as demand continues to grow for EVs and the batteries that power them.

The commerce ministry said the move was “conducive to better implementing our international anti-proliferation and other obligations, (and) safeguarding the stability of global industrial supply chains”.

“Recently, the Chinese government has… taken the decision to make optimisations and adjustments to (graphite) inflows and outflows,” it said.

“China’s normal adjustment of export controls does not target any specific country or region, and exports that comply with the relevant regulations will receive permission,” it said.

Daniel Kollar, the Shanghai-based Head of Intralink’s Automotive and Mobility Practice, told AFP “this is arguably the most effective way for China to influence the battery market, since almost all lithium-ion batteries rely on graphite anodes and China controls the lion’s share of the global market”.

“If strictly enforced, China’s export controls will help maintain and potentially grow the country’s position in the battery space… leaving other countries’ battery companies at a disadvantage until alternate graphite sources can be found,” Kollar said.

“It lays bare the fact that US and EU electrification plans are endangered if there is no derisked battery supply chain.”

Trade and technology have been at the centre of simmering tensions between Beijing and Washington in recent years.

The European Union has also signalled that it is seeking to reduce its reliance on trade with China in technology and other areas.

It launched a probe this month into Beijing’s subsidies for homegrown EV makers after accusations that their cheap products undercut European competitors.

The bloc is also mulling a separate investigation into Chinese support for its manufacturers of wind turbines.

Beijing has expressed “strong dissatisfaction” with the EV probe and denied that its backing for other industries is unfair.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)