Europe needs to take inspiration from Joe Biden’s tariffs on China to avoid to overconsumption of stock from China.
If other countries do not set rules like America’s president, Joe Biden, then they will all be dumping grounds for China’s industrial goods. Goods such as cars, batteries and cleantech components all could threaten their social market models.
What Are Biden’s Tariffs Against China
Biden has put these tariffs against China to make sure U.S. jobs are projected.
America has added a 100% border tax on Chinese electric cars. They have done this to ensure China is not in control of any goods markets. This is also done to ensure essential items are still made in their home country and not to rely on China.
Overproduction
It is common knowledge that so much of the world’s production of goods happens in China.
Because of China’s overproduction, they are driving manufacturing companies out of business worldwide. The more they make, the more the goods are moved around. When goods are shipped to other countries and sold there, this damages their markets and economies.
Will the U.K. Follow?
If Europe is forced to make a tariff, then surely the U.K. will have to follow along.
As China will be searching for foreign avenues to sell its excess goods, the U.K. will be forced to add a tariff, or else they risk losing their own manufacturing market. This will happen within a decade if the U.K. does not act now.
What Is Free Trade?
All this economic and manufacturing talk can be muddled and confusing. So, what exactly is free trade?
Free trade is a trading policy which does not restrict any imports or exports. Most nations are members of the World Trade Organization multilateral trade agreement. Unfortunately, the openness of free trade is changing due to the failing economy and China’s overproduction.
Chineses Economy Issues
In recent times, China’s economy has seen extensive growth because of the modern manufacturing they have capitalized upon.
Despite this surprising growth, they still have challenges they face within the economy. These issues include property crisis, local government debts, youth unemployment, loss of businesses and a loss of confidence from their own consumers. Currently, China’s leaders are avoiding addressing these issues.
1900s ‘China Shock’
In the 1990s and early 2000s the first “China Shock” hit the rest of the world.
This shock happened when China was opened to offshore plants by Western multinationals. This import competition caused many Americans to lose their jobs within the manufacturing industries. Today, with China’s overconsumption, many people are worried there will soon be another China Shock. If this happens again, it could affect certain economies more than it first did in the early 2000s.
Joe Biden Answers
Since the tariff was set with Joe Biden in office, he has made comments saying they won’t let the second shock “happen here” in America.
Biden also stated, “The future of EVs (electric vehicles) will be made in America by union workers.” This attitude compares to China’s Communist leader Xi Jinping who believes “there is no such thing as ‘China’s overcapacity problem,’” despite all the evidence at play.
China’s Solar Industry
China has one of the biggest solar power industries in the world. However, it wasn’t exactly an original idea.
Before they had a huge solar industry, they copied the technology from Europe and then engulfed the markets by mass producing. This almost completely extinguished the European solar industry. China then followed the same path with wind turbines and, subsequently, electrolysers. Experts say that electric cars will be next.
Europe’s Economy Can’t Cope
If Europe doesn’t follow suit with America’s tariffs, then they will be in a lot trouble if the second China Shock happens.
Since the COVID-19 pandemic, the European economy has not fully recovered. Public debt is incredibly high, and businesses are still struggling from having to close due to government mandates. The second China Shock will be a lot worse than the first, and it is not certain whether the economy will survive.
Xi Jinping and Vladimir Putin
Putin has recently visited China to show strength between the nations. This visit was purely to show the rest of the world that Putin has powerful friends on his side and the need for China’s support during the Ukrainian war.
Putin even admitted that he and China’s president are “as close as brothers,” with Xi Jinping referred to Putin as a “good friend and a good neighbor.”
What Happens Next?
What happens next is up to Europe. They are the last big region to make a decision or have a worse economy.
Both America and India are protecting themselves. America through Joe Biden’s tariffs and India just recently inflicted a de facto ban on the use of Chinese-made solar panels. Europe and the U.K. may have few choices, but they must do something to stay afloat.
