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US alleges Chinese dumping, levies stiff tariffs on EVs, Li-ion batteries

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The US announced new levies on $18 billion worth of Chinese imports, largely in the clean energy space, including a 100 percent tax on Chinese electric vehicles imported into the country. The move had been expected, with news reports indicating such an announcement was likely this week.

The tax on EVs was raised four-fold to 100 percent from 25 percent, while rates on Chinese solar cells were bumped up to 50 percent from 25 percent. Tariffs on some steel and aluminum imports will increase more than three-fold to up to 25 percent this year. The tariff on lithium-ion batteries for EVs and lithium batteries meant for other uses was also tripled. Other items on which the US ramped up tariffs are medical needles and syringes, ship-to-shore cranes, rubber medical gloves and face masks.

The US said the new tax levies were necessary to protect American industries from unfair competition. A senior official was quoted as telling journalists on a call that "China is producing at a rate and with a trajectory that's far in excess of any plausible estimate of global demand," adding: "That is going to flood the global market with supply that undercuts our ability to build productive capacity at home and ... leaves all of us across the world more vulnerable to economic coercion."

US officials have raised repeated concerns about China's clean energy manufacturing subsidies, pointing out that Chinese companies were using them to overproduce goods that would later be dumped on the global market, killing clean energy industries in other countries.

In March, Treasury Secretary Janet Yellen said: "China's overcapacity distorts global prices and production patterns and hurts American firms and workers, as well as firms and workers around the world." Xinhua, China's government news agency, called her claims "unfounded," and said they reflected the "zero-sum mindset of some policymakers in Washington." 

Although the new tariffs are steep, they are unlikely to have a major effect on the US market: Chinese EV imports in the US total less than $500 million. In comparison, America imports almost $7 billion worth of EVs from Germany and in excess of $6 billion from South Korean manufacturers such as Hyundai and Kia. 

American officials say the new tariffs will have "no inflationary impact" because they are targetted at specific sectors. Earlier, investment bank Goldman Sachs estimated that a percentage point increase in the effective tariff rate would decrease US gross domestic product by 0.03 percent and increase consumer prices by 0.1 percent. 

Courtesy: WSJ

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