Read on blog or Reader

U.S. – China Trade Relations — Getting Worse?

Stuart Malawer

May 2

Trade relations between the U.S. and China continue to be strained and seemingly getting a bit worse. The threat and possibility of a new Trump administration, new legislation concerning a possible mandated forced sale of TikTox, new U.S. subsidies to the Chip industry, and litigation concerning the solar imports -- all contribute to a nasty trade environment. Here are a few quotes from recent news accounts .............

"The economic cost to Beijing of Trump's tariffs, retained by Biden, is real. Chinese companies slapped with tariffs exported less to the U.S. …. The damage to China's gross domestic product from the trade war was three times as high as the hit to the U.S. …. Trump has said that if re-elected, he might impose tariffs of up to 60% on imports from China." "Rematch of Trump vs. China." Wall Street Journal (May 2, 2024).
"Biden's signing of the law started a 270-day clock, which could extend to a full year, during which the government has ordered TikTok to be sold to a non-Chinese buyer. If ByteDance does not divest by then, the administration said it would work to block TikTok from Apple's and Google's app stores …. But the law could be weakened by the fact that the United States does not ban foreign ownership of U.S. media companies. The Federal Communications Commission voted in 2013 to relax its long-standing rule concerning foreign investment in radio and TV …. Trump's effort to ban the app in 2020 was overturned by federal judges who said the government had not shown sufficient proof of harm to justify violating Americans' speech freedoms. Montana's statewide TikTok ban was halted last year by a federal judge who said it carried a pervasive undertone of anti-Chinese sentiment and violated the Constitution in more ways than one." "TixTox and Legal War." Washington Post (April 28, 2024).
"With recent multi-billion-dollar grants to Intel, TSMC, Samsung, and Micron, the US government has now spent over half its $39bn in Chips Act incentives …. Production would be roughly enough for the needs of critical infrastructure like datacenters and telecoms …. Japan and Europe are investing in foundational chip capacity …. Critics worry all these incentives create a subsidy race — but this began well before the Chips Act. A 2019 OECD study found that between 2014 and 2018 at least two US companies received more money from a foreign government than from the US …. Equity investors will debate whether these new investments can deliver an adequate financial return. Policymakers who see the Chips Act as an insurance policy against geopolitical shocks believe it is already paying dividends." "Success of CHIP Act." Financial Times (April 26, 2024).
"The Biden administration has used the Inflation Reduction Act and other policies to try to revive the U.S. solar manufacturing industry. That has spurred more manufacturing of solar panels …. A group of solar manufacturers have petitioned the U.S. International Trade Commission and the Department of Commerce to investigate potentially illegal trade practices by Cambodia, Malaysia, Thailand and Vietnam and impose higher tariffs on products they export to the United States. The complaint focuses on companies that have their headquarters in China …. In addition to the allegations in the petition, solar manufacturers have raised concerns about the use of forced labor in production of polysilicon in China and other Southeast Asian countries." "Solar Panels & U.S. Manufacturing." New York Times (April 24, 2024).