US-China talks helping avoid Chinese retaliation against Biden tariff hikes
Meetings with US officials gave their Chinese counterparts a ‘nuanced understanding’ of the decision and helped head off a ‘huge escalation’
China has not retaliated against US tariff increases on Chinese imports partly because of continued dialogue between the world’s two largest economies, the US Treasury’s top economic diplomat said in an interview aired on Tuesday.
Jay Shambaugh, Treasury undersecretary for international affairs, told the Marketplace public radio programme that Chinese economic officials came away from recent meetings with US counterparts with a “more nuanced understanding” of the Biden administration’s decision to impose steep tariff increases on EVs, lithium-ion batteries, semiconductors, solar cells, steel and aluminium and other strategic goods.
Many of the tariffs, including 100 per cent on Chinese EVs, 50 per cent on solar cells and 25 per cent on steel and aluminium, took effect on September 27. A doubling of duties on Chinese semiconductors to 50 per cent will take effect on January 1, 2025.
Shambaugh, who led a delegation of Treasury officials to Beijing on September 19-20, said the Chinese officials understand the tariffs are narrowly targeted to strategic sectors, including where the Biden administration is making investments to develop US production.
The increases, affecting some US$18 billion worth of imports, capped a two-year review of the punitive “Section 301” tariffs imposed by former US president Donald Trump that also kept those in place. The US directly imports very few vehicles from China and has high duties on Chinese made steel products.
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Shambaugh also said his team explained the increases were aimed at persuading Beijing to change its state-dominated economic practices.