US-China Talks Aimed at Preventing Chinese Retaliation Against Tariff Hikes – Treasury Official, Reuters

By David Lawder

WASHINGTON – China has not responded to the recent increase in U.S. tariffs on Chinese imports, a situation partially attributed to ongoing discussions between the two largest economies, according to a senior U.S. Treasury official.

Jay Shambaugh, the Treasury’s undersecretary for international affairs, shared insights in a recent radio interview, highlighting that Chinese economic officials emerged from recent meetings with their U.S. counterparts with a “more nuanced understanding” of the Biden administration’s decision to implement significant tariff hikes on electric vehicles (EVs), lithium-ion batteries, semiconductors, solar cells, steel, aluminum, and other key goods.

The newly imposed tariffs, which include a 100% rate on Chinese EVs, a 50% rate on solar cells, and a 25% rate on steel and aluminum, began on September 27. Additionally, tariffs on Chinese semiconductors are set to double to 50% starting January 1, 2025.

Shambaugh, who led a U.S. Treasury delegation to Beijing in mid-September, noted that Chinese officials recognized the tariffs are specifically aimed at strategic sectors, particularly those where the Biden administration is investing to boost U.S. production capabilities.

The tariff increases, which impact roughly $18 billion worth of imports, are part of a two-year review of punitive “Section 301” tariffs initiated under former President Donald Trump. The United States imports very few vehicles from China and already imposes high duties on Chinese steel products.

Shambaugh explained that the U.S. aimed to encourage China to alter its state-controlled economic practices. He added, “I think they were worried when they heard a review was going on that we might do something massive that would change everything in the economic relationship. Once we clarified our intentions, they gained a better understanding of our actions, which may be why we haven’t seen significant retaliation.”

Although China has not announced any countermeasures in response to the U.S. tariff increases, Canada’s own 100% duty on Chinese EVs has led to Chinese anti-dumping investigations into canola and rapeseed imports from Canada.

Meanwhile, Donald Trump, the Republican presidential nominee, has promised that if re-elected, he would impose across-the-board tariffs of 60% on all Chinese imports and 10% on all other imports into the United States.