Proposal to raise tariffs dismissed as ‘a political play’
Increases covering chips, EVs and other items will only fray relations further, Beijing warns
A US proposal yesterday to increase tariffs on imports of Chinese semiconductors, electric vehicles (EVs), steel and batteries drew a swift rebuke from Beijing, with allegations that the “political” decision further deteriorates already frayed ties between the world’s two largest economies.
“The US side is coming from political considerations” the Ministry of Commerce said in a statement on its website. “Specifically, it’s a typical political play, and the Chinese side expresses strong dissatisfaction.”
To press Beijing over technology-transfer issues, tariffs would rise to 100 per cent from 27.5 per cent on China’s EVs and to 50 per cent on its semiconductors and solar cells, under 14 proposed increases released by the US president’s executive office.
Tariffs on lithium-ion vehicle batteries and battery parts would rise to 25 per cent. The US also proposed increasing tariffs to 25 per cent on steel and aluminium products.
The increases are expected to be implemented from this year through 2026, depending on the items.
Ministry of Foreign Affairs spokesman Wang Wenbin said China would take “full necessary measures to safeguard its legitimate rights and interests”.
And in its separate statement, the Ministry of Commerce accused the US of “making mistakes again and again” and said the proposed tariff increases violate President Joe Biden’s commitments to avoid decoupling from China and “not to seek to suppress and contain China’s development”.
“This will seriously affect the atmosphere of bilateral cooperation,” it said. “The United States should immediately correct its wrongdoing and cancel the additional tariffs imposed on China.”
Tariffs on the table covered US$18 billion in goods, news agencies reported.
“President Biden is directing me to take further action to encourage the elimination of the People’s Republic of China’s unfair technology-transfer-related policies and practices that continue to burden US commerce and harm American workers and businesses,” US Trade Representative Katherine Tai said in the statement.
Tai called out “cyber intrusions and cyber theft” as transfer-related problems.
Before yesterday’s announcement, some of Biden’s economic officials had indicated concerns about manufacturing overcapacity in China and a possible overflow flooding American markets.
US Secretary of the Treasury Janet Yellen raised such concerns in her own statement yesterday, echoing comments she made on a trip to China in April about EVs and solar modules.
“President Biden and I have seen first-hand the impacts of surges of certain artificially cheap Chinese imports on American communities in the past, and we will not tolerate that again,” Yellen said.
“These overcapacity concerns are widely shared by our partners across advanced economies and emerging markets, motivated not by anti-China policy but by a desire to prevent damaging economic dislocation from unfair economic practices,” she said.
“These problems built up over time and will not be solved in a day.”
Previous tariffs have helped encourage China to take steps on issues identified by the US as violations of international trade agreements, according to the statement from Biden’s executive office.
On Monday, China took steps to showcase its supply-chain role for major international brands, showing how it was bunkering down ahead of the new tariffs.
Some of its biggest foreign investors were gathered at a forum held by the China Council for the Promotion of International Trade, and addressed by VicePremier Han Zheng.
“China is willing to be more open and adopt a more innovative way of thinking and approach to drive momentum for hi-tech innovation and development,” Han said. “We are looking for global partners for new areas of development and finding new models of growth.
“China’s capacity for developing sectors like green energy and green transport is still available.”
“This is an election year in the US,” said Chen Zhiwu, chair professor of finance at the University of Hong Kong.
“I do think Chinese officials had been prepared for this. This shouldn’t have been a surprise.”
Beijing would not be fazed by the EV tariffs because the United States imported relatively few such vehicles compared with Europe, Chen said.
He called the proposed EV tariff increase symbolic and said US election politics drove the announcement.
Apple’s Vision Pro mixed-reality headset appears to have been granted a key product certificate in China, where the tech giant is expected to release the device this year after its US launch in February.
A search on the website of the China Quality Certification Centre (CQCC), a product standards body, showed an Apple “wearable computer” had obtained from the Beijing-based agency on Monday a China Compulsory Certificate – a quality and safety accreditation required for all products sold in the country.
The unnamed Apple device, believed to be the Vision Pro, was shown in the search as made by Luxcase Precision Technology – a unit of Chinese electronics contract manufacturer Luxshare Precision Industry – in Kunshan, Jiangsu province.
Apple did not immediately respond to a request for comment.
The CQCC certification lends credence to Apple chief executive Tim Cook’s assurance that the Vision Pro, with prices starting at US$3,499, will be released this year on the mainland, according to his interview in March with state-run broadcaster China Central Television.
The Vision Pro’s launch in new markets could be imminent. A report on Sunday by Bloomberg, citing people with knowledge of the matter, said Apple planned to release the headset to international markets after the company’s annual Worldwide Developers Conference next month.
The device, which Apple markets as a “spatial computer”, represents the company’s first new product category since the Apple Watch in 2015.
The headset enables users to integrate digital media with the real world, while interacting with the system via motion gestures, eye tracking and speech recognition.
Ahead of the Vision Pro’s US release, merchants on Xianyu, a popular Chinese online flea market, in January offered to ship some stock to the mainland at double the official price. Xianyu is owned by Alibaba Group Holding, which also owns the Post.
Some domestic merchants in February started to offer the headset for rent to Chinese tech enthusiasts, weeks after the device was released for sale in the United States. Rental costs varied from 98 yuan (HK$105) an hour to 1,500 yuan per day.
High interest, however, may not immediately translate to strong sales when the Vision Pro is finally released in China, according to a research note published by Counterpoint last month.
The Vision Pro and other new mixed-reality devices to be released this year on the mainland were expected to “only have a limited impact on boosting the sales volume in this sector”, Counterpoint said.
“With the target consumer group already buying through other channels, the market response is expected to be calm,” said Counterpoint senior analyst Ivan Lam, who pointed out that many domestic consumers interested in the Vision Pro might have already got their hands on the device ahead of its official China release.
The Vision Pro’s high price tag also limits its consumer base to high-end users, according to Lam.
Still, Apple’s brand influence and innovation would “attract loyal fans and tech enthusiasts”, he added.