Global pulse of international trade: what is changing?

The global landscape of international trade is experiencing a significant transformation, primarily fueled by the actions of powerhouse nations like the United States. In a move to safeguard its interests, China is stepping up its efforts to protect its firms and exports as the U.S. finalizes substantial tariff hikes on Chinese goods.

The 2024 tariffs specifically target a range of crucial products — ranging from batteries and electric vehicles to medical tools and solar panels — this reflects the escalating tensions between these two economic giants. On September 13, 2024, the United States Trade Representative announced that the U.S. would proceed with previously proposed tariff increases following Section 301 tariff investigations.

Effective September 27, the new tariffs will impose a staggering 100% tariff on electric vehicles, a 50% tariff on solar cells, syringes, and needles, and a 25% tariff on a variety of Chinese products, including facemasks, battery components, cranes, and aluminum products. The situation will only intensify in 2025, with a 50% tariff on semiconductors and medical gloves. In 2026 the U.S. plans to place a 25% tariff on EV batteries, a 50% tariff on facemasks from China, and a 100% tariff on medical gloves. These tax increases were initially announced on May 14 by the Biden Administration and have largely remained unchanged since.

China, in retaliation, has responded firmly with a spokesperson from China’s Ministry of Commerce who stated, “China has repeatedly lodged serious representations to the U.S. side on the Section 301 tariffs, and the WTO has already ruled that these tariffs violate its rules. Instead of addressing this, the U.S. has further increased tariffs on Chinese products, compounding its mistakes”. In addition to this: China has also accused the United States of starting what they would consider to be the "largest trade war in economic history". With the latest move according to the BBC website taking the total amount of Chinese imports hit by US tariffs since July up to $250bn. Which means about half of all Chinese imports to the US are now subject to new duties.

The tensions continue to grow, as on September 12th, the Chinese Commerce Ministry published its 2024 Report on World Trade Organization, and Compliance of the U.S. The report showed concern over the perceived U.S. abuse of Section 301 to raise tariffs on Chinese goods, asserting that the U.S. is a “disrupter of global industrial and supply chain.” It also criticized the U.S. for undermining the multilateral trading system, engaging in what is called unilateral trade bullying, applying double standards in industrial policy, and politicizing economic issues by wielding a “tariff baton” under the guise of “de-risking.” Many Chinese businesses in fields that were targeted by the US tariff hikes said “that the levies will only have limited impact on their operations due to small exposure to the US market."

The China Council for the Promotion of International Trade (CCPIT) echoed these concerns, stating that the Section 301 tariffs violate WTO rules and significantly undermine the confidence of relevant Chinese and U.S. industries in long-term, stable cooperation.

The global pulse of trade will continue to shift in the coming years, this will raise questions about the long-term implications for both the United States and China and the effect it will have on the world economy.