By Ilya Tsukanov | Source
China has vowed to retaliate to the Biden administration’s tough new levies on a broad array of Chinese-made goods, ranging from semiconductors and solar power cells to electric cars. Veteran financial analyst Paul Goncharoff explains why the US has effectively just shot itself in the foot.
China’s Commerce Ministry warned Tuesday that it would “take resolute measures to safeguard its own rights and interests” in response to the US’s tariff hikes, accusing Washington of turning economic and trade issues into an instrument of “domestic political considerations.”
The tariff increase “violates President Biden’s commitment ‘not to seek to suppress or contain China’s development'” and “is not in line with the spirit of the consensus reached” between Presidents Biden and Xi, the Ministry said in a statement.
“This will seriously affect the atmosphere of bilateral cooperation. The United States should immediately correct its wrongdoing and cancel the additional tariffs imposed on China,” the ministry urged, adding that “the WTO has already ruled” that the restrictions are illegal.
The warning came just hours after the White House announced 25-100% tariff hikes on an array of Chinese goods, from rare earths minerals, steel and aluminum to semi-finished and manufactured goods like lithium batteries, semiconductors, photovoltaic cells, ship-to-shore cranes, electric vehicles and medical products.
The White House accused Beijing of “non-market policies and practices” resulting in “growing overcapacity and export surges that threaten to significantly harm American workers, businesses and communities,” and claimed that the Asian industrial powerhouse has engaged in “forced technology transfers and intellectual property theft [contributing] to its control of 70, 80, and even 90 percent of global production for the critical inputs necessary for our technologies, infrastructure, energy and health care.”
The tariff hike followed a review of restrictions imposed on China by the Trump administration after it launched a trade war with Beijing in 2018, with Team Biden declining to roll back any of the restrictions put in place by its predecessors.
China responded to the Trump-era measures with tit-for-tat restrictions on American exports, ranging from food goods to major American brand name goods like Harley Davidson motorcycles and Jack Daniels whiskey.
The Biden tariff hike constitutes “a jumble of US domestic politics played out on the world stage” ahead of the November elections, and Washington should expect “blowback” that “hits harder than the [tariff] shots fired,” says market analyst and independent economic consultant Paul Goncharoff.
“Simply stated it is overt protectionism, in breach of not just the rules of the WTO, but unilaterally dismissing the ‘rules-based order’ of the entire world trading system” that the US played a central role in creating, the observer told Sputnik.
Goncharoff expects China to stick to its traditional tit-for-tat approach to retaliating to US economic aggression, and says the Asian nation has demonstrated its ability to “play the long game” as far as reprisals go. Beyond formal retaliation measures in the form of trade restrictions, Beijing has access to an array of tools to make Washington regret its decision, the analyst warned.
How is this relevent to “Era of Light”?