Governments are resorting to tariffs and industrial policy, not because their prime ministers and presidents flunked Econ 101, Michael Lind says, but because they do not want their economies deindustrialized by a flood of low-priced, state-subsidized Chinese imports:
The Chinese import threat is why Canada has levied a 100 percent tariff on imported Chinese EVs, along with a 25 percent surtax on Chinese steel and Chinese aluminum. The European Union has slapped electric vehicles made in China with tariffs ranging from 7.8 percent to 35.3 percent, on top of the standard European tariff of 10 percent for imported automobiles. India imposes tariffs of 70 percent to 100 percent on imported electric vehicles from China and other countries.
Like the leaders of Canada, the EU, and India, former president Joe Biden is not generally thought of as a disciple of the Donald Trump school. But last May, the Biden administration imposed new duties not only on Chinese EVs but also on Chinese-made steel and aluminum, semiconductors, batteries, critical minerals, solar cells, ship-to-shore cranes, and medical products. According to a Biden White House press release in May:
China’s forced technology transfers and intellectual property theft have contributed 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 — creating unacceptable risks to America’s supply chains and economic security.
In December, the Biden administration announced new restrictions on the export of chip manufacturing to China. The Biden White House even taunted the first Trump administration for not having gone far enough with its protectionist policies: “The previous administration’s trade deal with China failed to increase American exports or boost American manufacturing as it had promised.”
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In 2023 China produced roughly half of the world’s crude steel. China is the world’s largest automobile maker, accounting for a third of the global total. China’s state-backed aerospace company, the Commercial Aircraft Corporation of China (COMAC), threatens to take global market share from America’s Boeing and Europe’s Airbus. China is also the world’s largest commercial shipbuilder, responsible for more than half of all shipbuilding. America’s share of the global shipbuilding market is 0.10 percent. Yes, zero point 10 percent. Most of the goods shipped across the oceans to and from the U.S. are in ships built in China (51 percent), South Korea (28 percent), or Japan (15 percent). During the Covid pandemic, Americans were shocked to learn how dependent the U.S. is on medical supplies from China, which provides around 30 percent of active pharmaceutical ingredients used in drugs by value and 78 percent of the vitamins in the U.S. A single Chinese company, DJI, controls 90 percent of the American drone market, including 90 percent of the drones used by American police departments and first responders.
China’s trade with the U.S. resembles that of a dominant manufacturing nation with a resource colony. In 2023, China’s main exports to the U.S. were broadcast equipment, computers, and office machine parts. Apart from integrated circuits, one of the few industries in which the U.S. retains an advantage, America’s main exports to China in 2023 were soybeans and crude petroleum, with the value of soybeans ($15 billion) more than twice that of silicon chip exports ($7 billion).