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Trade War II

In Washington, the U.S. administration is responding by raising tariffs and other barriers to block Chinese companies from winning control of critical markets—and locking out U.S. firms. On May 14, the White House announced that it’s increasing tariffs on Chinese semiconductor chips and advanced batteries, and boosting the 25 percent tariff on Chinese EVs to 100 percent. It’s also strengthening tariffs on Chinese solar panels, with solar-panel imports—nearly all from China—having climbed 82 percent over the past two years, while prices have dropped 50 percent. Addressing the many forms of state support for Chinese high-tech manufacturers—government subsidies, low-cost financing, land grants, and reduced energy prices—U.S. President Joe Biden said in April, “They’re not competing. They’re cheating.”

European countries have, in recent years, been reluctant to place duties on imported goods, but the EU is now taking steps to control Chinese exports. Brussels is weighing tariffs on China’s EVs and is investigating the legality of its subsidies for solar panels, steel, wind turbines, and medical devices. (In Germany and the Netherlands, solar panels have now become so cheap that people use them to build garden fences.) Xi Jinping, the general secretary of the Chinese Communist Party, visited Europe from May 5-9 partly to make the case against potential trade barriers. But after meeting Xi in Paris, Ursula von der Leyen, the president of the European Commission, said the EU was “ready to make full use of our trade-defense instruments”—adding, “Europe cannot accept market-distorting practices that could lead to deindustrialization here at home.”

Why does a new trade war seem to be breaking out between China and the West?

Alice Han is the China director at the consulting firm Greenmantle, where she leads research on China’s economy, technology, and politics. As Han sees it, Beijing is committed to pursuing continued economic growth through enormous global exports; the U.S. and the EU are committed to preventing it from dominating markets for advanced manufacturing; and electoral politics in America and Europe are meanwhile driving their leaders to take increasingly hawkish positions against China. But crucially, Han says, non-Western countries are also becoming concerned about China’s export surge, giving Washington and Brussels potential allies in their campaign to contain Beijing—not just economically but politically.

“European countries have an array of different approaches to China. Some have traditionally been more aggressive than others—and now the European Union itself, under the European Commission’s president, Ursula von der Leyen, has been leading the more aggressive faction. They want to use regulations to limit Chinese investment in building infrastructure in Europe or to limit Chinese exports from pouring into European markets. The future of the EU position is up in the air, though—depending on the outcome of upcoming elections, both for the European Parliament in June and within member states over the next few years. The populist right, which tends to be relatively aggressive on China, could well gain power in Germany and in France. But it’s not only the right; even the Greens have become more aggressive on China than some mainstream parties.”

“China’s domestic economic system is built in such a way that it needs to export its industrial production globally. The Chinese state has just invested so much in this production system that the result is overcapacity—meaning it produces vastly more than its domestic market can absorb. Some data shows that purchases of Chinese exports make up around 35 percent of global GDP growth—and that figure isn’t likely to go down anytime in the next few years. The U.S., for one, simply can’t compete on price with Chinese tech products. And in some areas, it doesn’t have the human talent to—despite the billions of dollars in subsidies the U.S. administration is putting into advanced manufacturing, as it’s doing with semiconductor chips.”

“The trend in Washington is to use legislative and executive actions to block or blacklist Chinese companies. Even now, I expect the Biden team to raise tariffs on Chinese steel and aluminum, for instance. It makes political sense in the months leading up to the U.S. elections in November. It would cater to a potential base of voters who lost jobs to China, although that’s probably a small number of people. And the administration seems very worried by polls showing Biden trailing Trump in important swing states.”

Life on a Warming Planet

Last September, Rachel Cleetus explored the heat waves, wildfires, and other extreme weather events of the passing summer—parsing out their relationship to human-caused climate change and assessing the state of play in efforts to mitigate it. “Some sectors are harder to decarbonize than others,” Cleetus says. “In transportation, global demand for electric vehicles has been accelerating for individual people and families, and for mass transit, but air travel and maritime transportation are much harder to move. The production of iron, steel, and cement is also hard to decarbonize.” As she explains, despite the growing adoption of renewable-energy technologies, humanity has already locked in significant climate impacts, such as rising sea levels and disappearing ice sheets—and could yet cause irreversible changes to other natural systems.

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