By ERNIE GOTTA
President Biden has been using his final year in office to expand on the Trump administration’s tariffs on China. New tariffs were announced in May, but the implementation was delayed until September. The steepest of the tariffs included a 100% tax rate on electric vehicles. Other imposed tax hikes on Chinese companies include 50 percent increases on semiconductors, 50 percent on solar panels, 25 percent on steel and aluminum, and 25 percent on non-lithium ion battery parts. Most of the taxes mentioned above went into effect on Sept. 27. Others in the list have various implementation dates between 2024 and 2026.
The move hopes to slow China’s advance in flooding the U.S. market with less expensive goods. The capitalist class in the U.S. faces a serious crisis with the rise of Chinese imperialism and the increased competition for resources, labor, and markets on a global scale.
U.S. policy makers decry what they call China’s unfair trade practices that give hefty subsidies to Chinese manufacturers. Capitalist economists at the Kiel Institute write, “Beijing heavily subsidizes its domestic industries, particularly in sectors such as green technologies like electric mobility or wind power. Estimates suggest that China’s overall subsidies range between three to nine times that of other OECD countries such as the USA or Germany.”
China doesn’t look to be slowing its advance any time soon. This has U.S. policy makers anxious to find a way to regain hegemony in the global marketplace. This was clearly expressed by Vice President Kamala Harris in her speech to the Democratic National Convention when she said it’s necessary that the U.S., not China, “wins the competition for the 21st century.”
The Office of the U.S. Trade Representative, the government agency responsible for developing U.S. trade policy, writes, “Additionally, the White House released a statement further explaining how China’s acts, policies, and practices have contributed to China’s significant control of global production for the critical inputs necessary for U.S. technologies, infrastructure, energy, and healthcare and China’s growing overcapacity and export surges, and how such control threatens U.S. supply chains and economic security.”
Other problems exist in North America for the U.S. as both Mexico and Canada have more relaxed trade policies with China. Potentially, this could be a way for China to get around U.S. tariffs. The Brookings Institute writes, “For example, exports from Mexico of EVs from facilities owned by Chinese EV maker BYD could enter the U.S. under USMCA and pay zero tariffs if it meets the agreement’s rules of origin, regional steel and wage rate requirements, and could also benefit from the $7500 IRA tax credit for EVs assembled in North America. Alternatively, BYD could still export EVs to the U.S. from Mexico and pay the WTO MFN rate of 2.5% for automotive imports, compared to the 100% tariff rate the U.S. would apply to imports of EVs directly from China.”
Despite the implementation of these tariffs and the ongoing trade war, the U.S. and China established the Economic Working Group in 2023, which has met five different times. The most recent meeting, which concluded on Sept. 20, raised concerns from both imperialist powers. These meetings represent one important way that negotiations between fiercely competitive economic powers unfold.
Beyond the U.S. expressing concerns about Chinese overcapacity and China’s opposition to increased tariffs, both sides also try to navigate the exploitation of weaker economies. A readout from the Fifth Meeting of the Economic Working Group Between the United States and the People’s Republic of China stated, “The meeting sessions concluded with the two sides sharing views on domestic macroeconomic outlooks and discussions on areas of cooperation, including debt issues and financing challenges in emerging and developing economies.”
There are also concerns from automakers like the Big Three that wanted to see an easing of tariffs on minerals and other materials critical to the production of electric vehicles. The supply chain will be impacted not just by the import of raw materials needed in the production process but also by the replacing old heavy machinery like cranes that are used by longshoremen to unload container ships. David Lawder writes in Reuters, “The Biden-Harris tariffs include a new 25% levy on Chinese-made ship-to-shore cranes, a China-dominated sector with no U.S. producers. The Port of New York and New Jersey said it has eight cranes on order from China’s state-owned ZPMC at $18 million apiece, and a 25% tariff would boost the cost of each by $4.5 million, “causing a significant strain on the Port’s critical and limited resources.”
Differing perspectives on tariffs
Despite Donald Trump’s attempt to paint Biden, Harris and the Democrats as soft on China, what we see is not just a continuation of trade policy with slight changes from one administration to the next but rather an expansion of Trump’s trade policies. These policies are a reflection of a bipartisan agreement that the tariff,s on the one hand, offer the best possible chance for increased profits for U.S. manufacturing, retail, and other sectors. And on the other hand, perhaps more importantly, they create barriers for China’s encroachment on U.S. markets. But not everyone agrees.
There are other projections about the impact of the bipartisan tariffs. Some believe the tariffs will negatively impact many across the U.S. Erica Yorke reported in June 2024 for the Tax Foundation, “Before accounting for behavioral effects, the $79 billion in higher tariffs amounts to an average annual tax increase on US households of $625. Based on actual revenue collections data, trade war tariffs have directly increased tax collections by $200 to $300 annually per US household, on average. Both estimates understate the cost to US households because they do not factor in the lost output, lower incomes, and loss in consumer choice the tariffs have caused.”
Looking back toward classical economist David Ricardo, The Economist recently put forward a perspective that tariffs are a barrier to the development and innovation in the capitalist system. In opposition to Biden’s tariff expansion, The Economist writes, “As David Ricardo laid out more than two centuries ago and experience has since shown, it makes sense for governments to open their borders to imports even when others throw up barriers. Residents in the liberalizing country enjoy lower prices and greater variety, while companies focus on what they are best at producing. By contrast, tariffs coddle inefficient firms and harm consumers.”
The Economist continues, “Today’s American firms fear competition from BYD’s Seagull, some versions of which cost less than $10,000 in China. Now, they can sell inferior cars for three times the price. This gives American motorists little incentive to switch to greener wheels, as Mr Biden says he wants them to. You might argue that tariffs were inevitable, because America’s green subsidies would otherwise flow to Chinese firms. That is true, but it shows how one inefficient policy leads to the next.”
Elon Musk also seemed to agree with this perspective in May, speaking to a technology conference in Paris. Peter Hoskins of the BBC reported that Musk stated, “In fact, I was surprised when they were announced. Things that inhibit freedom of exchange or distort the market are not good.”
“Tesla competes quite well in the market in China with no tariffs and no deferential support. I’m in favour of no tariffs,” he added.
China expands auto production in Europe and Central Asia
Chinese company concerns over U.S. tariffs are offset by pivoting toward markets in Europe and Central Asia especially in auto manufacturing. East Asia Forum reported, “In 2022, China produced almost 60 per cent of the world’s EVs—both battery electric vehicles and plug-in hybrid vehicles. In 2023, production is expected to reach 8 million units, or 25 per cent of all cars sold in China compared with 22 per cent in the European Union, just 6 per cent in the United States, and a measly 3 per cent in Japan. Chinese firms also offer 90 different EV brands at prices ranging from US$5000–90,000. The average EV in China cost around €32,000 (US$53,800) in 2022, compared to an average of €56,000 (US$94,100)in Europe.”
BYD, the world’s largest electric vehicle producer, is ready to build the first Chinese auto factories in Europe, with Hungary as the targeted location. China has invested billions of dollars in Hungary and signed a cooperation agreement during Xi Jinping’s visit with far-right Hungarian leader Viktor Orban. Will this give China an entry point deeper into European markets despite the threat of new tariffs from the European Union?
While the E.U. is considering increases to tariffs on Chinese products, the hikes will be far lower than in the United States. Wang Chuanfu, the CEO of BYD, has expressed that the actions by the U.S. and EU only suggest that the U.S. is afraid of the advance of Chinese companies. BYD is also opening a factory in Turkey, Chinese automaker Chery is opening production in Barcelona, and Zhejiang Geely Holding acquired Volvo and is looking to start production in Europe.
In Central Asia, Uzbekistan and Kazakhstan are quickly becoming a center for Chinese auto manufacturing, as both BYD and Chery are producing popular small electric vehicles and buses sold widely in the region. In 2023, Nargiza Murataliyeva and Shakhriyor Ismailkhodjaev wrote in The Diplomat, “Chinese brands also dominate EV imports to Kyrgyzstan, but unlike in Uzbekistan, where local demand is driving sales, few EVs from China can be seen on the streets of Bishkek or Osh. Instead, Kyrgyzstan serves as a convenient base for re-export to Russia.”
Chip wars
Similarly, U.S. tariffs seek to tamp down China’s technological rise in semiconductor development and production. The U.S. wants to maintain its role as the top competitor in research and development but sees China fast approaching in the rearview mirror. For example, the Information Technology and Innovation Foundation (ITIF) writes, “In 2021–2022, 55 percent of global semiconductor patent applications were Chinese in origin (and China’s number of applications doubled America’s) while Chinese entities surpassed U.S. and Japanese ones for semiconductor patents granted in 2022.“
The ITIF report continues, “China is rapidly closing the gap across many facets of the semiconductor production process and is developing genuine IP and innovation capabilities across the board. In January 2024, Intel CEO Pat Gelsinger asserted that, despite China’s ongoing efforts to advance its semiconductor industry and design more sophisticated chip manufacturing tools, the country still lags behind the global semiconductor industry by approximately 10 years. While there’s no question that China’s behind, the real gap, as noted, is probably half that now, or about five years—at least for the design and fabrication of leading-edge logic chips. China continues to plough hundreds of billions of dollars into its semiconductor industry in an effort to close that gap. Moreover, over the long term, as one observer commented, ‘The likelihood of China developing advanced chip-making capabilities is almost certain.’”
The U.S., in response to China’s technological development, passed the CHIPS Act in 2022, which is an attempt to stay competitive globally in the production of semiconductors. The Biden administration awarded Intel over $11 billion in 2024 to boost chip production in the U.S. Today, Intel is building four foundries in the U.S.; it also had plans to build foundries in Germany and Poland. While the Intel buildout in the U.S. is proceeding, its project in Europe has been halted over financial concerns and the need to cut costs. Intel CEO Pat Gelsinger said in a Sept. 16 announcement, “We will pause our projects in Poland and Germany by approximately two years based on anticipated market demand.”
An environmental component
China’s EV blitz will, of course, be promoted by greenwashing the harmful environmental practices that underscore capitalist production. However, the expansion of EV and semiconductors under current modes of production will only increase the output of carbon emissions. Both China and the U.S. have the world’s largest carbon emissions. The connection between inter-imperialist competition and the increase in the consumption of fossil fuels to maintain an edge over the opponent has driven us toward ecological catastrophe.
No amount of EV production is going to slow down the ongoing ecological crisis significantly, when you couple production with the build-up of arms among the imperialist powers. The U.S. military alone is the single biggest emitter of carbon dioxide. Sonner Kerht in Inside Climate News reports, “Using Department of Energy data, Crawford found that the U.S. military is a major polluter. Since the beginning of the Global War on Terror in 2001, the military has produced more than 1.2 billion metric tons of greenhouse gasses. Crawford acknowledges her data is likely incomplete—but even with the available data, she found that the U.S. military emits more than entire countries like Portugal and Denmark, and that the Department of Defense accounts for nearly 80% of the federal government’s fuel consumption.”
Negotiations by other means
Perhaps the most dangerous aspect of the tariffs and the broader trade war is the threat of a real inter-imperialist war. The military buildup and rearmament that has defined the tensions of the present period, deepened by Russia’s invasion of Ukraine and the Israeli genocide in Gaza and expanded war in Lebanon, looms over the discussions on trade.
The U.S. in particular has ramped up its military presence in the Pacific. Following the pivot away from the Pacific during Trump’s presidency, the Biden administration has gone all out to buttress U.S. military positions to counter China’s aggressive moves around Taiwan, activity in the South China Sea, and joint military exercises with Russia.
The 2024 Workers’ Voice Political Resolution points out, “China’s rapid military expansion, particularly its naval strength, has put the U.S. at a strategic disadvantage, especially in potential conflicts involving Taiwan. China is swiftly expanding its naval force and aims to have a larger fleet than the U.S. And the latter cannot keep up because of the extensive shipyard capacity of China, which far exceeds that of the United States: China is scheduled to reach a fleet of 400 in 2025 and 440 ships by 2030, according to the Pentagon, while the U.S. Navy’s Navigation Plan 2022 is to reach 350 manned ships … by 2045!”
According to an April 2024 article in The New York Times, “Since the start of his administration, President Biden has undertaken a strategy to expand American military access to bases in allied nations across the Asia-Pacific region and to deploy a range of new weapons systems there. He has also said the U.S. military would defend Taiwan against a Chinese invasion. … Biden signed a $95 billion supplemental military aid and spending bill that Congress had just passed and that includes $8.1 billion to counter China in the region. And Secretary of State Antony J. Blinken traveled to Shanghai and Beijing this week for meetings with Mr. Xi and other officials in which he raised China’s military activity in the Taiwan Strait and the South China Sea, calling it “destabilizing.”
The NYT outlines part of the strategy: “The United States is sending the most advanced Tomahawk cruise missiles to Japan and has established a new kind of Marine Corps regiment on Okinawa that is designed to fight from small islands and destroy ships at sea. The Pentagon has gained access to multiple airfields and naval bases in the Philippines, lessening the need for aircraft carriers that could be targeted by China’s long-range missiles and submarines in a time of war.”
Drawing some conclusions, asking more questions
The weakening of U.S. hegemony and intensified inter-imperialist competition where the U.S., China, Russia, E.U., and so on are vying for profits in every corner of the globe spells trouble for workers, farmers, and the oppressed across the globe. The working class is now facing the very real possibility that the governments of the world will once more send workers to fight each other in bloody battles to redivide the resources of the world.
The contradictions inherent in the capitalist system can’t be resolved through Economic Working Groups, tariffs, or threatening military maneuvers. The capitalist class simply has no long-term solutions to the problems that we face under capitalism. As long as the capitalist are in charge, their priorities will put their profits over the interests of human need, and that trend will inch the world powers closer and closer to war.
For the working class caught in the crosshairs of capitalist greed, the question should be: How can we create a world that flips the narrative by putting the needs of humans and the planet above the profit of a select few? Once workers and the oppressed in their billions take up that question, then the next question will be how do we build a vehicle, a working-class political party, rooted in revolutionary socialism, to drive that struggle forward?
