On May 14, the White House issued a statement saying that it would significantly increase tariffs on Chinese EVs, lithium batteries, solar cells, steel and aluminum, cranes and other products imported from China. Among them, the tariff on electric vehicles will be increased from the current 25% to 100%.
According to the White House, the countermeasures against China's "unfair trade practices" targeted strategic industries and imposed tariffs on Chinese imports worth $18 billion (130.2 billion yuan).
At a press conference held by the Chinese Foreign Ministry on the 14th, Foreign Ministry spokesperson Wang Wenbin said that China has always opposed unilateral tariffs in violation of WTO rules, and China will take all necessary measures to safeguard its legitimate rights and interests.
As China's "new three" exports, new energy products such as electric vehicles, lithium batteries, and solar cells are all on the list of products that the United States has raised tariffs this time. Last year, the export volume of the "new three" products exceeded the trillion-yuan mark for the first time.
According to the White House's statement, the tariff rate on China's automotive lithium batteries will increase from 7.5% to 25% this year, and from 7.5% to 25% by 2026. In addition, the tax rate on battery components, natural graphite and some critical minerals will also be increased to 25% between 2024 and 2026.
Liu Yanlong, former secretary general of the China Chemical and Physical Power Industry Association, said that the tariffs imposed by the U.S. government are expected to have a greater impact on China's lithium battery exports.
According to statistics disclosed on the website of the General Administration of Customs, from 2020 to 2024, the United States has been the number one destination for China's lithium battery exports for four consecutive years. Last year, China's lithium battery exports to the United States reached US$13.549 billion (about 97.9 billion yuan), accounting for 20.8% of total exports.
In the first quarter of this year, the United States remained China's largest export destination for lithium batteries, accounting for 22% of total exports, amounting to US$2.908 billion (about 21 billion yuan).
Lithium batteries cover different product types such as power batteries, energy storage batteries, and consumer batteries. The above statistics do not disclose the specific classification information of China's lithium battery exports.
Major Chinese lithium battery companies such as CATL, China Innovation Aviation , Gotion, and EVE Lithium Energy have not responded to the tariffs imposed by the U.S. government.
Last year, China Innovation Airlines' sales revenue from the U.S. market was 44.04-million-yuan, accounting for about 0.1% of the annual revenue. CATL, Guoxuan Hi-Tech and EVE have not released specific sales figures for their U.S. markets.
The United States has previously passed legislation to provide subsidies to the local new energy industry and other ways to reduce its dependence on China's lithium batteries, especially the power battery industry chain. The Inflation Reduction Act, implemented last year, encourages companies to establish a power battery industry chain in North America, and provides a federal tax credit of $7,500 per electric vehicle assembled in North America, but has strict standards for the sources of critical minerals and components in the power batteries it carries.
In December, the U.S. government further issued the Foreign IRA Sensitive Entity Guidance, clarifying that starting in 2024, vehicles containing battery components manufactured or assembled by foreign sensitive entities will lose their eligibility for the tax credit.
All companies incorporated in China or in which the Chinese government holds 25% or more of their shares will be considered foreign sensitive entities. The move is intended to prevent Chinese companies from benefiting from the tax credits offered by the U.S. government, which could affect lithium battery exports to the U.S. market.
Liu Yanlong said that the provisions of the U.S. Inflation Reduction Act restricting China's lithium batteries from enjoying tax credits have been reflected in the export data in the first quarter of this year. In the quarter, the value of lithium batteries exported from China to the United States fell by 11.2% year-on-year, and the number of exports also fell by 55.6%. In addition to the impact of the bill, due to the decline in raw material prices, the export price of lithium batteries has dropped sharply year-on-year, which is also an important reason for the decline in export value.
According to the White House's statement, the U.S. government will increase tariffs on solar cells imported from China, whether assembled into modules or not, from 25% to 50% this year.
The White House statement noted that the tariff hikes were to prevent China's policy-driven overcapacity, which has depressed prices and inhibited the development of solar capacity outside of China.
China has used unfair practices to dominate more than 80%-90% of some parts of the global solar supply chain and is trying to maintain the status quo, the statement said. China's policies and non-market practices are flooding the global market with artificially cheap solar modules and panels, undermining investment in solar manufacturing outside of China.
Since the beginning of this year, some officials in Europe and the United States have frequently hyped up the so-called "overcapacity" theory in China's new energy field. U.S. Treasury Secretary Janet Yellen and other U.S. officials who visited China this year have also expressed concern to China about the alleged overcapacity in China's new energy sector, which distorts global prices and production patterns.
Regarding the above-mentioned "overcapacity" theory, the Ministry of Commerce, the National Development and Reform Commission and other departments have responded successively. A spokesperson for the Ministry of Commerce said that China's new energy industry continues to provide high-quality production capacity and makes important contributions to global green development. Relevant countries and regions should not hold high the banner of green development while wielding the stick of protectionism. This is a classic paradox and double standard.
Solar manufacturers have announced plans to invest nearly US$17 billion (122.9 billion yuan), supported by the Inflation Reduction Act signed by the Biden administration, which would increase U.S. manufacturing capacity eightfold, enough to supply panels to millions of homes annually by 2030, according to data in the White House statement.
China's photovoltaic overseas trade barriers have existed for a long time. The United States has previously restricted China's photovoltaic trade through "anti-dumping and countervailing", 201 tariffs, and 301 tariffs. In late April, it was also revealed that the United States was planning to restart a new round of anti-dumping and anti-counterfeiting investigations into China’s photovoltaic industry.
Under the high tax rate, Chinese photovoltaic module companies can only seek to set up factories in Southeast Asia. Data from the China Photovoltaic Industry Association shows that the United States has not appeared in the top ten export markets for China's photovoltaic products in the past two years.
Due to the lack of a complete photovoltaic industry chain and sufficient production capacity, US photovoltaic products are highly dependent on imports. Currently, most solar products in the United States are imported from Southeast Asia. The photovoltaic modules exported to the United States account for about 80% of the country's total imports, and most of them are produced by Chinese companies here. The control of import tariffs on photovoltaic products will increase the cost of photovoltaic projects in the United States and may affect its photovoltaic construction.
The above-mentioned statement from the White House mentioned that the U.S. government also plans to increase the tariff rate on port cranes imported from China from 0% to 25% this year. The White House said port cranes are an important part of the infrastructure that enables the continued flow of critical goods to, from and within the United States, and the administration is taking action to mitigate potential risks to U.S. supply chains.
In February, U.S. President Joe Biden signed an executive order giving the U.S. Coast Guard greater powers to oversee port cybersecurity and plans to invest more than US$20 billion (144.6 billion yuan) in port security over the next five years, including manufacturing port cranes in the United States.
Several foreign media reported that the US source pointed out that the move is to replace all Chinese-made port cranes used in US ports, and Chinese-made cranes pose a potential risk to US national security. According to data provided by the White House, nearly 80 percent of U.S. ports, with more than 200 cranes, are made in China.
Zhenhua Heavy Industries (600320.SH), the world's largest port crane provider, later responded that it was aware of recent actions taken by the U.S. government based on cybersecurity concerns at U.S. ports, as well as media reports claiming that "cellular modems" were installed on Zhenhua Heavy Industries' cranes. Zhenhua Heavy Industries takes the concerns of the US side seriously and believes that these reports can easily mislead the public without adequate factual review.
According to Zhenhua Heavy Industries' previous disclosure, the company's business in the United States accounts for less than 10%.
In addition, the White House plans to raise tariffs on some steel and aluminum imports from China from 0%-7.5% to 25% from this year.
In 2023, China's direct steel exports to the United States will be 850,000 tons, accounting for 0.9% of China's total steel exports; During the same period, China exported about 240,000 tons of aluminum to the United States, accounting for 4.5% of China's total exports.
Source: https://mp.weixin.qq.com/s/nAl1qpyyHAPHFvHNjssBVQ
