WASHINGTON: US President Joe Biden unveiled steep tariff hikes on Chinese green tech this week, hitting imports like electric vehicles, chips and solar cells — and adding stress to US-China ties.

But despite targeting $18 billion in imports across new and already targeted sectors, analysts do not expect a major economic impact, assuming Beijing does not retaliate significantly.
So what will be the repercussions of his moves?

Biden’s EV, semiconductor and battery tariffs “will not have a noticeable impact on US inflation or GDP,” said economist Ryan Sweet at Oxford Economics.
There were already levies on Chinese EVs, causing automakers to avoid the US market — though the new increase takes the tariff level from 25 percent to 100 percent.
“Last year, China exported around $400 million in battery EVs to the US while the European Union exported nearly $7.5 billion to the US,” Sweet said.
Oxford’s model assumes China does not retaliate significantly, given the current weaknesses seen in the world’s second largest economy, he said.
Tianlei Huang, research fellow at the Peterson Institute for International Economics, believes tariffs could hurt some Chinese companies’ sales and profitability.
But “the direct impact of those tariff hikes is actually quite limited,” he told a virtual event. “It’s more of a signal.”

More restrictive trade policies can cause low-carbon technologies to be less competitive against rivals like combustion engine vehicles, according to research from the Center for Strategic and International Studies (CSIS).
But research scenarios found that “rising trade frictions didn’t overcome the still-falling costs of clean energy,” said Joseph Majkut, director of the energy security and climate change program at the think tank.
US policies like the Inflation Reduction Act, which puts funding toward supporting the green transition, will still support the creation of domestic content too, he added.

China warns of retalization

Beijing has warned it would “take resolute measures” to defend its interests.
Policymakers could target industries in US swing states to impact Biden’s election chances, or opt for a symbolic retaliation, the Trivium China policy analysis group said in a newsletter.
China’s response, or lack thereof, will be telling in terms of how officials plan to address acts they deem as “economic suppression” moving forward, Trivium added.
“The challenge for the Chinese is, how do they do it in a way that doesn’t freak out foreign businesses?” said Bill Bishop, who publishes the Sinocism newsletter.
With Beijing previously announcing export controls on two rare metals essential for the manufacture of semiconductors, action on critical minerals remains possible, he said.
Beijing-based economist Mei Xinyu expects the response to be targeted, and analysts generally do not expect tit-for-tat actions.
China does not import American EVs while “Beijing and Shanghai have been very supportive of the one major US EV player, Tesla, in the China market,” said Paul Triolo, partner for China at Albright Stonebridge Group.

European tariffs
Biden’s move “may accelerate pressure on the EU to adopt a similarly strong posture in its own China tariff review, which is forthcoming,” said CSIS senior fellow Emily Benson.
The European Union launched an inquiry into Chinese electric car subsidies last year, fearing a threat to Europe’s auto industry. This could culminate in a tariff hike from the current 10 percent.
For now, the leaders of Germany and Sweden have expressed reservations about new European tariffs on Chinese EVs.
But if multiple major developed economies are on board with a tariff approach, China will likely be concerned from both an economic and propaganda standpoint, Bishop told AFP.
US tariffs may also “force Brussels’ hand” as it could divert trade to Europe, said Atlantic Council senior fellow Joseph Webster in an analysis.
“Brussels will have to act quickly, either to put its own tariffs in place or to accept a flood of Chinese-made products,” Webster added.

Analysts said the latest tariffs probably didn’t come as a surprise to China, given the signals from US officials ahead of the announcement.
But Bishop noted that the underlying problems between Washington and Beijing run deep — and that while both sides are talking again, their behaviors do not appear to have changed.
“These new actions just chip away at that very, very thin facade of stability,” he said.
 

BEIJING: Leaders Xi Jinping and Vladimir Putin framed their nations’ ties as a stabilising force in a chaotic world as they met Thursday in Beijing, where the Russian president is seeking greater Chinese support for his war effort in Ukraine and isolated economy.
It is Putin’s first trip abroad since his March re-election and the second in just over six months to China, an economic lifeline for Russia after the West hit it with unprecedented sanctions over its military offensive in Ukraine.
Putin was greeted by Xi at a grand welcoming ceremony outside Beijing’s Great Hall of the People, footage by state broadcaster CCTV showed.
The national anthems of both countries and martial tunes played as the two leaders met, kicking off a two-day visit by Putin that is expected to see the countries deepen a relationship they have declared has “no limits.”

In a meeting, Xi then told his “old friend” Putin that China-Russia relations were “conducive to peace,” according to a readout from Beijing’s foreign ministry.
“China is ready to work with Russia to... uphold fairness and justice in the world,” Xi added.
“The China-Russia relationship today is hard-earned, and the two sides need to cherish and nurture it.”
Putin, in turn, told Xi the two countries’ relations were “stabilising factors in the international arena.”
“Relations between Russia and China are not opportunistic and not directed against anyone,” Putin said, according to a Kremlin readout.
“Together, we uphold the principles of justice and a democratic world order that reflects multipolar realities and is based on international law,” he added.

Major offensive on Ukraine
The Russian leader’s arrival came hours after he hailed his country’s troops for advancing on “all fronts” on the battlefield in Ukraine, following a major new ground assault.
Xi, who returned last week from a three-nation tour of Europe, has rebuffed Western criticism of his country’s ties with Moscow, enjoying cheap Russian energy imports and access to vast natural resources, including steady gas shipments via the Power of Siberia pipeline.
“This is Putin’s first trip after his inauguration, and it is therefore intended to show that Sino-Russian relations are moving up another level,” independent Russian political analyst Konstantin Kalachev told AFP.
“Not to mention the visibly sincere personal friendship between the two leaders.”
But their economic partnership has come under close scrutiny from the West in recent months.
US Secretary of State Antony Blinken, who met Xi in Beijing last month, warned China’s support for Russia’s “brutal war of aggression” in Ukraine had helped Russia ramp up production of rockets, drones and tanks — while stopping short of direct arms exports.
China claims to be a neutral party in the Ukraine conflict, which it has never condemned and in which it has sought to frame itself as a mediator.
Putin, in an interview published in Xinhua ahead of his visit, hailed Beijing’s “genuine desire” to help resolve the Ukraine crisis.

Russia-China growing partnership
China-Russia trade has boomed since the Ukraine invasion and hit $240 billion in 2023, according to Chinese customs figures.
But after Washington vowed to go after financial institutions that facilitate Moscow, Chinese exports to Russia dipped during March and April, down from a surge early in the year.
An executive order by President Joe Biden in December permits secondary sanctions on foreign banks that deal with Russia’s war machine, allowing the US Treasury to cut them out of the dollar-led global financial system.
That, coupled with recent efforts to rebuild fractured ties with the United States, may make Beijing reluctant to openly push more cooperation with Russia — despite what Moscow may want, analysts said.
Eight people from both countries involved in cross-border trade told AFP in recent days that several Chinese banks have halted or slowed transactions with Russian clients.
Putin’s post-election trip to Beijing echoes Xi’s own visit to Russia after his re-anointing as leader last year.
The two leaders are set to sign a joint declaration following the talks, the Kremlin said, and attend an evening marking 75 years of diplomatic relations between the two countries.
Putin will also meet Premier Li Qiang — China’s number two official — and travel to the northeastern city of Harbin for a trade and investment expo.