As US-China Trade Conflicts Grow into a Tariff War, We Have To Respond Proactively

are signs that the conflict between the United States and China will spread to trade issues. This is because the U.S. is moving to impose high-rate tariffs on Chinese products that have a huge influence on its domestic industry before the presidential election in November. On April 17, President Joe Biden ordered the U.S. trade representative to consider a measure that would triple tariffs on Chinese steel and aluminum. On the same day, Biden officially announced this news at the steel workers’ union headquarters in Pittsburgh, Pennsylvania, swing state in the presidential election. Biden criticized the Chinese government and its steel companies for using subsidies. “They’re not competing, they’re cheating,” he said. Biden also reaffirmed his opposition to the acquisition of U.S. steel by a Japanese company, a gesture that one could see as a ploy to gain the votes of industrial workers.

Following former President Donald Trump, Biden seems to have joined in hitting China with tariffs and as the election becomes grows closer, the public pledges of protectionism between the two candidates may become fiercer. This is because many see the votes of workers becoming an important variable in major swing states in the “Rust Belt,” a declining industrial area. U.S. Trade Representative Katherine Tai testified to Congress on April 16, citing solar panels, electric cars, batteries and important minerals in addition to steel and aluminum as examples of the gravity of China’s wrongful behavior and said she is seriously considering responding with investigations and tariffs based on Article 301 of the Trade Act. Article 301 states that retaliatory steps are prescribed when U.S. companies see damage from the unfair trade practices of other nations. China has also not hidden the possibility of a retaliatory response. China’s Ministry of Commerce said, “China will closely watch the progress of the U.S. investigation and we will take all necessary actions and firmly protect our rights and interests.” Trump, who has pledged a 10% universal tariff, alluded to the possibility of imposing tariffs of more than 60% on China.

At the moment, we must keep close tabs on the influence America’s high tariffs on Chinese products will have on our domestic industry. If tariffs block the export route of Chinese steel to the U.S., it could affect the excess supply of steel worldwide. While China exports surplus steel at low prices due to their withering domestic construction economy, it is said that there is reportedly an estimated 100 million tons of excess steel in the international market.

The low-price offensive of Chinese products is not only a U.S. problem. Deflation exports, where China drastically lowers the price of products and sells them in large quantities to other countries, is a global problem. People predict that there will even be an oversupply of solar panels. Amid growing signs of a tariff war between the U.S. and China, the trade war between the two countries is highly likely to intensify regardless of who is elected president.

More than ever, South Korea has no choice but to thoroughly prepare. It remains to be seen to what extent Secretary of State Antony Blinken’s April 23 visit to China will be an opportunity to ease the conflict between the two countries, including with regard to trade issues. The government has to analyze the effect of the U.S.-China trade war and come up with preemptive countermeasures.