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China has signaled it intends to retaliate against trade barriers introduced by the US and EU when they launched anti-dumping investigations into chemical imports.
The Commerce Department announced Sunday that it is investigating imports of polyoxymethylene copolymer, a thermoplastic widely used in consumer electronics and the auto industry, from the European Union, the United States, Japan and Taiwan.
The Chinese government’s move suggests it will take retaliatory measures against foreign trade barriers, but the narrow investigation into chemicals suggests China runs large trade surpluses with the US and EU. Taking this into account, it also highlights the limits of our ability to respond.
The move comes after the Biden administration last week announced a slew of tariffs on Chinese goods, including clean energy technology and computer chips. Most shockingly, it quadrupled tariffs on electric vehicles to 100%, aimed at preventing companies like BYD and Nio from gaining a foothold in the U.S. auto industry.
The White House said $18 billion of products in “strategic areas” would be affected by the tariff hikes, arguing it would give U.S. companies time to catch up with Chinese rivals in clean energy technology.
In response, China last week said it would take “resolute measures to protect its rights and interests.” The retaliatory measures were established during the Trump era, when the U.S. introduced tariffs on a wide range of Chinese imports and Beijing responded with targeted measures on a narrower range of items. It follows the pattern.
The Commerce Department said the Chinese government’s investigation into chemical imports will take a year, but could be extended by six months.
The investigation follows a number of EU investigations into Chinese government manufacturing subsidies.
The city of Brussels launched an anti-subsidy investigation into Chinese electric vehicles in October amid mounting accusations that the Chinese government is supporting the electric vehicle industry with huge state subsidies and flooding the European market with cheap EVs. did. The investigation will determine whether Beijing’s policies have “caused economic harm” to European manufacturing.
According to an analysis by the policy group Transport and Environment, Chinese-made electric vehicles are expected to account for a quarter of all battery car sales in the EU this year, up from 19.5% last year.
The Chinese government’s announcement comes ahead of a July 4 deadline for the European Commission to decide whether to impose interim tariffs or quotas on Chinese EVs.
The European Commission said on Sunday it would “carefully study” the contents of the Chinese government’s investigation into chemical imports “before deciding on next steps”.
In April, the EU launched an investigation into two Chinese solar panel manufacturers for profiting from market-distorting subsidies. Europe’s solar power industry has accused Chinese rivals of cutting prices, resulting in huge losses and the closure of several power plants across the continent.
