The US attempt to conclude a “protectionist alliance” harms itself and everyone else – Opinion

In a statement issued after a meeting of finance ministers and central bank governors, the United States encouraged its Group of Seven (G7) allies to resume discussions on China’s “overcapacity.” The move came after Washington significantly raised import tariffs on many clean energy products from China.

Washington’s offer of a “protectionist alliance” blatantly disregards economic facts and principles, disregards win-win open cooperation, threatens the well-being of consumers around the world, and undermines the global transition to clean energy sources.

Currently, global demand for clean energy capacity far exceeds supply. What threatens global efforts to combat climate change is not too much, but too little, high-quality clean energy. The U.S. attempt to suppress China’s clean energy industry fundamentally undermines the future of the earth and its inhabitants.

The development of China’s clean energy sector is the result of open competition. This is due to adaptation to industry transformation trends and unwavering commitment to ecological and low-emission development. Its development is underpinned by a well-established industry and supply chain system, solid industrial support capabilities, abundant and high-quality human resources and other production assets. Its continuing dynamics results from market competition, which favors technological breakthroughs and innovative business models.

As Wichai Kinchong Choi, senior vice president of leading Thai bank Kasikornbank, noted, Chinese enterprises’ commitment to research and development and innovation, as well as effective cost control, have given their products a competitive advantage in the global market.

“Given their desirable quality and affordable price, Chinese enterprises’ products are naturally loved by consumers around the world,” Choi said.

The notion of China’s “overcapacity” in new energy is unfounded and will only hinder the global ecological transition and the development of emerging green industries.

Concerned about China’s advances in renewable energy, Washington has imposed massive tariffs and pressured allies to follow suit under the guise of combating “overcapacity.”

US protectionism disguised as “fair competition” undermines the global multilateral trading system and only serves the US obsession with hegemony.

Ironically, the United States itself is an example of the “non-market policies” that it blatantly criticizes. Discriminatory policies, represented by the “CHIPS and Science Act” and the “Inflation Reduction Act”, provide subsidies to specific sectors while denying products to WTO members.

These activities distort fair competition, disrupt global supply chains and violate WTO rules, including national and most-favoured-nation rules. Such practices have undermined the fair trade environment and attracted criticism from the international community, including US allies.

Despite the United States’ hysterical push for a “united front” against China’s green industry, Europe isn’t buying it. European nations are wary of seeing Washington’s stance as a recipe for trade wars and deeper global divisions.

After Washington announced 100 percent tariffs on Chinese-made electric vehicles, Italian Economy and Finance Minister Giancarlo Giorgetti said there was a “trade war” and warned of the risk of “fragmentation” of global trade.

German Chancellor Olaf Scholz pointed out that at least half of electric vehicle imports from China to Europe are locally produced Western brands.

“We should not forget: European manufacturers, as well as some American ones, are successful in the Chinese market and also sell many vehicles produced in Europe to China,” Scholz said.

German Finance Minister Christian Lindner told reporters at the G7 meeting that “trade wars are about losing them; You can’t win them.” Lindner said EU countries must respond to dumping and unfair practices, but must not undermine free and fair global trade.

“We should definitely avoid any trade wars, because a trade war is neither in the interests of the United States, nor China, nor Europe, nor any country in the world,” Bruno Le Maire, French minister of economy, finance and industry and digital sovereignty, told reporters.

It’s not just America’s European allies who have doubts: there is plenty of skepticism at home.

“America’s new protectionist stance will raise prices, limit consumer choices and threaten our growth,” said Steven Rattner, an adviser to the Obama administration’s Treasury secretary, in a recent New York Times opinion piece.

“I hope that when the election dust settles, we can return to what David Ricardo explained so clearly two centuries ago,” Rattner said, referring to Ricardo’s 200-year-old theory of comparative advantage: the idea that specialization in are able to produce most efficiently and then trade with others, nations may be better off.

On Thursday, Tesla CEO Elon Musk said he opposes US tariffs on Chinese electric vehicles (EVs). “Neither Tesla nor I asked for these tariffs. In fact, I was surprised when they were announced,” Musk said. “Things that impede freedom of exchange or distort the market are not good.”

“The United States should stop playing the victim role in trade with China,” reads the title of an article published May 16 by Foreign Policy magazine, which argues that it is not too late for Washington to change its strategy because “the United States is vastly outcompeted by China in batteries and electric vehicles” in terms of cost, quality and innovation.

Trade protection in this area would have been almost unthinkable even half a generation ago, David Wallace-Wells, an opinion writer for The New York Times, said in a speech Wednesday.

“Electric vehicle protectionism does not look like a market modification intended to level the playing field for U.S. automakers, but a market wall. It is intended to completely keep Chinese exports out of the United States,” Wallace-Wells wrote.

If history is any guide, protectionism only prevents stagnation. The United States’ pursuit of a “protectionist alliance” is a surefire way to sabotage global economic and ecological health. US shortsightedness and double standards will not solve industrial problems, but they will likely deepen cracks in the global economy.