TL/DR –
President Biden’s trillion-dollar initiative to boost American manufacturing and transition to cleaner energy sources is being challenged by a surge of cheap exports from China. Biden is considering new measures to protect industries like electric-vehicle production and solar-panel manufacturing from Chinese competition, including higher tariffs on Chinese steel and aluminum products. Unions, manufacturing groups, and some economists argue that more restrictions on Chinese imports might be needed to ensure that Biden’s industrial initiatives are not undermined by lower-cost Chinese versions of the same technologies.
President Biden’s Manufacturing Initiative Meets Chinese Export Surge
President Biden’s trillion-dollar plan to boost American manufacturing and expedite the transition to cleaner energy sources is clashing with a surge of cheap Chinese exports, jeopardizing the investment and jobs crucial to Biden’s economic agenda. The president is considering additional measures to safeguard emerging industries such as electric-vehicle production and solar-panel manufacturing from Chinese competition. The administration may need to further limit Chinese imports to ensure Biden’s ambitious industrial initiatives aren’t overshadowed by lower-cost Chinese versions of the same technologies.
Biden’s Industrial Policy and Chinese Competition
Economist Eswar Prasad emphasized the danger posed by China’s increased investment in the very areas central to Biden’s industrial policy. Both America and China are leveraging large government subsidies to boost economic growth and vie for dominance in critical global markets: technologies to expedite a global shift away from fossil fuels. However, the two nations’ strategies for financing these industries significantly differ. Chinese officials have poured money into factories, helping to balance a real estate crisis and sluggish domestic consumption.
Subsidized Chinese Exports and American Manufacturing
Subsidized exports of solar panels, batteries, and electric vehicles are beneficial for curbing inflation and battling climate change. However, the potential for lost jobs and closed businesses is considered politically and economically too high. The Biden administration is trying to reconcile these competing goals as it endeavors to persuade China to reduce its production of clean energy technology.
Global Reactions to China’s Manufacturing Exports
Americans are not alone in their concerns about China’s new wave of exports. European leaders have voiced similar worries. The European Union is conducting its own investigations into Chinese imports of electric vehicles, potentially leading to tariffs on those products. Likewise, Mexico and Brazil are pursuing anti-dumping investigations into China, which could result in new trade restrictions.
The Future of Trade Relations with China
The United States and its allies have historically struggled to form a coordinated response to threats to their domestic industries from Chinese competition. Mark Haefele, the chief investment officer of UBS Global Wealth Management, suggested that the success of China’s manufacturing exports could trigger a more coordinated response from the United States and Europe on trade. President Biden has faced increasing pressure to do more to protect American industry, such as raising tariffs on Chinese components for electric vehicles or other clean energy technology.
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