China's burgeoning production of electric cars and other green technologies has become a flashpoint in a new U.S.-China trade fight, highlighted by Treasury Secretary Janet Yellen during her five-day visit to China and seized on by former President Donald Trump in incendiary remarks on the campaign trail.
Trump, at a rally late last month in Ohio, charged that China would seek to export cars into the United States through Mexico. The U.S. currently has a 25% tariffs on cars from China that has largely blocked vehicles from that country, but Mexico has a free trade agreement with the U.S. Trump promised to block such imports with new tariffs, but suggested if Biden were reelected it would be a 'bloodbath' for the auto industry. So what's behind this new trade fight between the U.S.
For now, the two sides have mainly agreed to hold talks on the issue. China hasn't committed to any steps to address American concerns, arguing that its cheap solar panels and other green products are helping the world wage the costly battle against climate change. But the government in Beijing has also acknowledged that manufacturing overcapacity and weak consumer spending are challenges it needs to confront to achieve sustainable growth for its own economy.
The rapid expansion of EV production has sparked fierce price wars that are expected to drive some makers out of business. Huang Hanquan, an expert on industrial policy, said that China needs better policy coordination so that it can encourage the development of new technologies without prompting every province to promote the same industry, and companies to overinvest.
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