Endangering global economic growth and exacerbating trade tensions! IMF approves US tariffs on China

"The International Monetary Fund (IMF) has criticized the US government for significantly imposing tariffs on Chinese products such as electric vehicles, lithium batteries, and semiconductors, warning that they may endanger global trade and economic growth." Bloomberg reported on the 16th that IMF spokesperson Julia Kozak stated on the latest announcement of tariffs by the US government on China and advised the US: "An open trade policy is crucial to maintaining US economic performance and will bring greater benefits to the US." The report stated that the IMF is increasingly outspoken in criticizing the impact of US policies on the world, including Washington's rising debt levels and targeting China. Trade restrictions and industrial policies, as well as the Federal Reserve's tightening monetary policy. On the other hand, after the US government announced a new round of tax hikes on China on the 14th, it faced criticism from multiple parties. US government officials tried their best to defend themselves, but were found to have numerous loopholes and contradictions. US Trade Representative Dai Qi had to retract her "completely wrong" remarks. In Europe, there is a call for the European Union not to follow the United States.

The first question

IMF spokesperson Julia Kozak held a regular press conference in Washington on the 16th, and the first question was how she views the US government's imposition of tariffs on Chinese electric vehicles, solar products, and other products.

Kozak first emphasized that the International Monetary Fund supports an open and rule-based trading system, which has been crucial for economic growth and stability in the past few decades. "In recent years, there has been a significant increase in trade restrictions (introduced by various parties). In 2019, we recorded 1000 trade restrictions, which have increased to 3000 by 2023. Such restrictions may disrupt trade and investment, leading to the fragmentation of the global economy and supply chains, and triggering retaliatory actions. The cost of such differentiation for the global economy may be very high." Kozak said that IMF research shows that global economic differentiation can lead to various consequences, and in severe cases, global GDP may lose up to 7%, equivalent to the combined economy of Germany and Japan. If trade and technology supply disruptions are added, the cost will be even higher. She urged all countries to resolve their differences within a multilateral framework, and also encouraged the United States and China to work together to find a solution to the fundamental issue of escalating trade tensions.

Bloomberg reported that the IMF is increasingly outspoken in criticizing the impact of its largest and most influential shareholder, the United States, on the global economy. IMF President Georgieva stated last month that the global economy is at risk and that "everyone is paying attention to the United States", with particular mention of inflation issues in the United States and the Federal Reserve's monetary policy.

"Chinese electric vehicle giants hit by Biden tariffs are welcomed in Brazil," Bloomberg said in an article titled on the 17th. Chinese electric vehicle manufacturers have been rejected by the US market, but they are turning their attention to those popular countries, one of the largest being Brazil. Brazil is the sixth largest automotive market in the world, with BYD and Great Wall Motors already dominating the country's electric vehicle sales. Now, these two Chinese giants are also building factories locally, which will help them sell cars tax-free throughout Latin America.

The US trade representative said the wrong thing

In order to prove the rationality of imposing tariffs on Chinese products and quell criticism from all sectors, US officials have resorted to all means, even disregarding basic common sense. According to a report by CNN on the 16th, US Trade Representative Daisy has attracted attention this week. She denied on the 14th that the new tariffs imposed by Biden on China will raise prices for American consumers like the tariffs imposed on China during the Trump era. "I believe that the link between tariffs and prices has been largely proven to be incorrect," said Dai Qi.

CNN stated that this statement has been questioned by economists and even officials in the Biden administration. Research has shown that the tariffs imposed by Trump on China have indeed increased the costs for American consumers and businesses. In June 2019, Biden himself posted on social media platform X, stating that "Trump did not have the basic knowledge. He believed that tariffs were paid by China, and any new economist could tell you that the American people were paying tariffs." According to a report, a person familiar with the situation told CNN that Daqi "said the wrong thing.".

American economist Alex Durant told CNN that he is "confused" about Daisy's "completely wrong" remarks. According to reports, Obama administration official and current senior researcher at the Peterson Institute for International Economics, Mori Obsteadfeld, also refuted Daisy's statement, "Biden was right in his June 2019 tweet. The higher tariffs are mainly taxes aimed at Americans rather than foreigners, and Biden's new tariffs, like Trump's broader tariffs, will exacerbate inflation in the United States. Consumers will suffer losses, and businesses relying on imported intermediate components will also suffer losses."

The New York Times reported on the 16th that the Biden administration is betting that the new tariffs imposed on China will be welcomed in domestic politics, which is conducive to his successful re-election, even if these policies may slow down the US energy transition. Singapore Asia News reported that analysts say the new tariffs imposed by the United States on China are politically motivated and unlikely to lead to an uncontrollable trade war.

On the 16th, the American Foreign Scholar magazine stated that considering the scope and scale of these new tariffs, as well as the strategic considerations of the Biden administration, even considering possible countermeasures from China, there is no need to worry about a new trade war breaking out between China and the United States this year. But if Trump wins the upcoming presidential election, this relative stability may become unstable.

"The European Union should not closely follow the United States"

"The European Union should not closely follow the United States," Swiss newspaper Neu Zurich reported on the 17th, stating that the United States' imposition of tariffs on Chinese electric vehicles means that the European Union may face the same pressure. The measures taken by the Biden administration are purely protectionist actions for the presidential election, and although the European Parliament elections are about to take place in June, the EU should not be guided by this. In terms of subsidies to enhance the competitiveness of domestic enterprises, no one is blameless, especially Americans and Europeans. The article argues that it is unwise for the EU to hastily raise tariffs on Chinese products in order to protect local suppliers. Competition from China is a good thing for customers as they can benefit from more choices and lower prices, and more intense competition will also stimulate suppliers within the EU. On the other hand, Brussels should carefully consider the risk of a trade war, as the Chinese government is unlikely to accept punitive tariffs without countermeasures.

"Why doesn't anyone think about customers?" German Economic Weekly published a commentary on the 16th, stating that in the dispute over Chinese car tariffs, politicians and managers pursue many interests, but not the interests of citizens. Biden hopes to win the election, so he wants to promote "America First". Corresponding to this is the President of the European Commission von der Leyen, who also wants to win the election, so she calls for "Europe first". The author of the article supports "Otto" - a driver from Germany nicknamed "ordinary consumer". He wants a cheap car and wants to protect the environment, so he doesn't want the government to impose crazy tariffs on Chinese electric vehicles.