Climate-based tariffs by US, EU on Chinese steel and aluminium would ‘set a concerning precedent for China’

Biggest takeaway from the reported discussions is that ‘trade policy and climate policy are growing increasingly intertwined’, analyst says

But it’s unclear whether the European Union will get behind the idea reportedly pitched by the Biden administration, as relationship with China could be affected

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The United States and the European Union are reportedly mulling over the possibility of imposing tariffs on Chinese steel. Photo: EPA-EFE

Published: 8:00am, 12 Dec 2022

The imposition of climate-based tariffs on Chinese steel and aluminium – reportedly being considered by the United States and European Union – would set a concerning precedent for China, but the overall impact on those sectors should be limited, according to analysts.

And they say that such a concerted effort by the US and EU also serves as a warning to the world’s second-largest economy, as it reflects how climate change could become another battleground between China and the West.

“The tariff issue has lasted for quite some time,” said Lu Xiang, a US-China relations expert with the Chinese Academy of Social Sciences. “The US has no sincerity in cooperating with China on climate change.”

He also noted that products related to climate change, such as solar panels and lithium batteries, could be hit by such punitive measures that are commonly imposed in trade disputes.

The idea of both the US and EU slapping climate-based tariffs on Chinese materials was generated within the administration of US President Joe Biden, according to Bloomberg, which quoted unidentified people familiar with the matter. They added that it was still in the initial stage and had not been formally proposed.

“If such an agreement were to come into place, it would set a concerning precedent for China,” said Alfredo Montufar-Helu, the head of the China Centre for Economics and Business at The Conference Board, a global non-profit think tank.

“It would institutionalise an alignment between the US and the EU to take concerted action on trade matters that could negatively impact the Chinese economy, and it could potentially be expanded to cover other carbon-intensive industries,” he told the Post.