Unlock Editor’s Digest for free
FT editor Roula Khalaf picks her favorite stories in this week’s newsletter.
Janet Yellen urged the EU to join US efforts to clamp down on green technology exports from Beijing, warning that a glut of cheap Chinese goods could threaten the survival of factories around the world.
The US and its Western allies must respond “with unity” to China’s growing manufacturing power or risk their own industries, the finance minister said in a speech in Germany on Tuesday.
Yellen also rejected criticism from European allies that the US’s own large-scale tax breaks and subsidies for green manufacturing represented a “turn to American protectionism.”
The Treasury secretary spoke just a week after the White House sharply raised tariffs on Chinese clean-tech exports to the U.S. in a move to protect industries in states like Pennsylvania and Michigan where President Joe Biden and Republican Donald Trump are courting workers. votes for the November presidential election.
She said the tariff hikes, which included a fourfold increase in the rate on Chinese electric vehicles to 100 percent, were “strategic and targeted moves.”
Yellen’s speech in Frankfurt to an audience with German Finance Minister Christian Lindner comes as Europe searches for a middle ground amid deepening trade tensions between Washington and Beijing.
European Commission President Ursula von der Leyen has already said she will not join the US in imposing tariffs, adding that Brussels would take a different approach to Washington’s “blanket tariffs”.
“We want competition, we want to do business with each other, but we want it to be fair and within the rules,” she told the Financial Times on Tuesday before Yellen’s comments.
German Chancellor Olaf Scholz, in response to Biden’s announcement of US tariff hikes last week, said Western brands were responsible for “at least 50 percent of electric car imports from China.” Swedish Prime Minister Ulf Kristersson said “it’s a bad idea to start breaking up global trade”.
Unlike Washington, Brussels, which exports more of its own goods to China, has tried to address the flood of cheap Chinese solar panels, wind turbines and electric cars through investigations and reports it says are in line with World Trade Organization rules. .
But Scholz, von der Leyen and French President Emmanuel Macron echoed Yellen’s warning to Beijing — made during a visit in April — that China’s bumper subsidies could exacerbate geopolitical tensions.
“China’s industrial policy may seem distant as we sit here in this room, but unless we respond strategically and with unity, the viability of businesses in our countries and around the world could be at risk,” Yellen said Tuesday. at the Frankfurt School.
“Support for low- and middle-income countries and workers around the world is essential to the strength of the global economy,” she added.
The U.S. Treasury secretary also hit back at EU claims that the Biden administration’s inflation-reduction law boosted investment in American manufacturing at the expense of Europe.
“We don’t just create opportunities at home. US-EU trade in green energy products will exceed $2 billion in 2022, and European countries can be leaders in this area,” Yellen said. “As we produce more in the U.S., we will lower the cost of clean energy technologies globally, benefiting people and economies around the world.”
She added that with more than $3 trillion in investment opportunities each year from now until 2050, mitigating climate change was compatible with increasing energy security and driving economic growth.
“Looking ahead, there is scope for many more joint and complementary actions to support these three goals,” she said. “The IRA works and we welcome similar action around the world, including the European Green Deal.”
Yellen also called for greater cooperation between the US and the EU on critical minerals, saying the supply chains of both jurisdictions were “excessively concentrated in China” and on the development of multilateral development banks such as the World Bank, artificial intelligence and semiconductors. .