New US Duties on Chinese Products Have a Negative Impact on Global Trade

The ongoing trade war between Washington and Beijing threatens to affect every major sector of global trade, from innovation industries to agriculture

Massimiliano Giansanti

The sharp increase in tariffs by the United States on many industrial and technological goods exported from China threatens a trade war of global proportions with consequences that cannot be predicted. According to the latest World Trade Organization (WTO) forecasts, international trade in goods will grow by just 2.6% this year, following a contraction of more than 1% recorded in 2023.

US President Joe Biden has imposed “prohibitive” customs duties that have virtually banned strategic exports of Chinese industry – from metals, including steel and aluminum products, to semiconductors and microchips, to photovoltaic panels and electric vehicles.

In fact, the spike in customs tariffs from 25% to 100% has hit a very sensitive part of Chinese foreign trade: the US administration has in its crosshairs many categories of Chinese goods, the production of which is supported by significant government subsidies with the effect that the supply of such products constantly exceeds domestic demand and therefore flows out to international markets.

Fearing that unsold goods in the USA will massively flow to European Union markets, Brussels is studying protectionist measures that risk dragging the Old Continent into a trade war with the world’s second-largest economy.

There are many worries and concerns. Food and wine trade is also under threat, according to the president of Italian agricultural organization Confagricoltura. “The fact remains,” Confagricoltura president Massimiliano Giansanti told Italian newspaper Agrisole, “that the US administration’s decision risks provoking a trade war that could negatively affect the global economic trend. China has already responded by signaling that it will take all necessary measures. Meaning retaliation on imports from the USA.”

Customs duties are a two-pronged stick. And European producers will have to “prevent the possibility of retaliatory measures by the Beijing authorities, which could also affect imports of agri-food products from the EU,” Giansanti said, recalling that China is currently “the third largest producer of agricultural products and the food sector supplier of member states.” According to the European Commission, sales in the Chinese market totaled 14.6 billion euros in 2023.

But the flywheel of mutual retribution is picking up steam. The European Commission is investigating China’s state subsidies for the production of electric cars. Moreover, and in light of the decisions announced in Washington, Brussels may within weeks opt for a solution similar to that of the USA by promoting higher EU duties.

“The looming situation,” Giansanti concluded, “adds new tensions to already highly volatile international circumstances. We are paying the price for abandoning multilateral rules to govern international trade.”