U.S. tariff hikes politicize trade issues: experts

BEIJING, May 16 (Xinhua) -- Chinese and foreign experts called the U.S. decision to raise additional tariffs on electric vehicles (EVs) and other products a continued politicization of trade issues, which will smother healthy competition and also inflict an adverse impact on the EV supply chain in the United States itself.

On top of existing tariffs under Section 301, the United States on Tuesday announced new tariffs on a variety of imports from China, including EVs and lithium batteries.

Bill Russo, founder and CEO of Automobility Limited, a Shanghai-based strategy and investment advisory firm, told Xinhua the tariff hikes were not only targeting the finished cars, but also lithium batteries, and, therefore, will also affect the supply chain in the sector in the United States.

Russo said China has industrial advantages in scale batteries and the components of EVs and such advantages make it possible to deliver EV products at an affordable price point.

"Geopolitics may slow down the rate at which some companies may go to certain markets because of trade and tariff barriers," Russo said, adding that the additional tariffs are being implemented mainly to protect domestic auto manufacturers that fear their loss of competitiveness in their country.

The additional levy will cause tariffs on Chinese EV imports to rise to 100 percent this year, while the tariff rate will rise to 50 percent on solar cell imports. Tariffs on certain Chinese steel and aluminum products will climb to 25 percent this year, and semiconductor tariffs will shoot up to 50 percent by 2025.

Cui Dongshu, secretary general of the China Passenger Car Association, said low-carbon and environmental protection is a global trend, so the EV sector has bright prospects, considering up to 80 percent of the world's auto market share is still fuel vehicles.

"Everyone should develop through fair and market-based competition, rather than resorting to political means or coercion to address economic issues," Cui said.

Josef Gregory Mahoney, a professor of politics at East China Normal University, said the EV industry in China has been held up recently as a case study of global competition.

He said China welcomed Tesla and other players and made efforts to support the sector with a complete supply chain, which made it possible for China to realize comparative advantages.

"However, Washington doesn't like the fact that China has risen. It doesn't like the fact that China has become a global competitor," he said, adding that these are political issues that will hurt fair competition.

Zhu Chaoping, a global market strategist with J.P. Morgan Asset Management, said competition in the EV sector is good for the global economy.

In the past China was a major battlefield for EV competition and the Chinese automakers were learning about all these technologies in open market competition, he said.

"So in this way, things are just improving in a positive upward spiral," said Zhu, noting that China may one day become an exporter of technologies. "But in terms of the political considerations, this kind of spiral might be interrupted."

(Xinhua correspondent Guo Yujing contributed to the story.)