Downsides abound from US tariff hikes on Chinese electric vehicles, but there’s also a path where developing nations benefit, says a Lowy Institute director.
In its latest unilateral actions, the US is further undermining an open global trading system, which developing countries heavily rely on. , quadrupling them to 100 per cent, as well as 25 to 50 per cent tariffs on a raft of other Chinese products, including lithium-ion batteries, solar cells, and some critical minerals.The signal itself also matters.
Those hopes now risk being squeezed out between America’s determination to build its own domestic industries and a potential flood of cheap Chinese imports blocked from the US market, and likely the European one soon also.There is, in other words, plenty to worry about. Yet, there are also a few important glass-half-full angles that risk being overlooked.
From a development standpoint that’s okay, as over time this will help countries to build their own domestic capabilities. But a lot will depend on whether the US eventually extends its targeting beyond China geographically to its firms operating in third countries also. If the US succeeds in building out its own green tech capabilities, it will ultimately involve a big increase in investment, far beyond the public subsidies themselves. While pulling investment into the US, it will also mean a bigger trade deficit and the need for far more imports from the rest of the world.
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