Combatting China’s manufacturing might

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A widening transatlantic rift | Trade and (geo)politics | Reconsidering the de minimis rule | More research from Hinrich Foundation

A widening transatlantic rift

CBC News reports that Canada will slap big tariffs on Chinese-made EVs, while Sam Lowe in Most Favoured Nation laments that Canada is following the US lead in straying from WTO rules. Britain, for its own reasons, is accepting imports of Chinese-made EVs, per The Economist. Chinese steel imports are set to reach an 8-year high which is sure to provoke a backlash, reports the Financial Times. 

Meanwhile, Federal Reserve researchers find that as the US is de-risking, its other foreign suppliers are relying more on China. At the same time, the EU is deepening its trade dependency on China as the US is shifting away, write Mary Lovely and Jing Yan of the Peterson Institute for International Economics. 

Mentioned publications 

1. Trudeau says Canada will slap big tariffs on Chinese-made EVs – CBC News, August 26, 2024
   CBC reports that Canada will impose a 100% tariff on Chinese-made EVs.
2. Blame Canada – Sam Lowe, Most Favoured Nation, August 30, 2024
   Sam Lowe calls out Canada for following the US’s lead in imposing tariffs without following WTO rules.
3. Britain’s unusual stance on Chinese electric vehicles – The Economist, August 27, 2024
   The Economist explains Britain’s outlier response to Chinese-made EVs.
4. Chinese steel exports to reach 8-year high – Financial Times, September 1, 2024
   The FT reports that China’s steel exports are at historic highs this year.
5. As the U.S. is Derisking from China, Other Foreign U.S. Suppliers Are Relying More on Chinese Imports – Trang Hoang and Gordon Lewis, Board of Governors of the Federal Reserve System FEDS Notes, August 2, 2024
   Fed economists find that the average U.S. supplier's import share from China increased 2% between 2017 and 2022.
6. While the US and China decouple, the EU and China deepen trade dependencies – Mary E. Lovely and Jing Yan, Peterson Institute for International Economics, August 27, 2024
   PIIE finds that since 2013, the EU has boosted its dependence on China for all imports. 

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Trade and (geo)politics

Domestic politics, economic, and employment pressures, along with geopolitics, are weighing heavily on international trade relationships.  Reuters breaks the news that the US has warned Nippon Steel that its acquisition of US Steel is a national security risk, while Nikkei Asia reports that Nippon Steel has promised to make most of the US Steel board American. 

Despite current domestic economic headwinds, China seeks to shore up ties with Africa, though some African leaders want more balanced trade and investment, writes the Wall Street Journal. Reuters reports that China has offered African US$ 51 billion in funding.  

Separately, Benin seeks to industrialize by keeping its raw materials at home and manufacturing textiles domestically, finds the Financial Times. 

Mentioned publications 

1. Exclusive: US warned Nippon its U.S. Steel bid poses a national security risk – Reuters, September 5, 2024
   Reuters reports the Biden Administration has informed Nippon Steel that its bid raises risks.
2. Nippon Steel promises most of U.S. Steel board will be American – Nikkei Asia, September 4, 2024
   Nikkei reports that U.S. citizens will make up the majority of the board of directors of U.S. Steel if Nippon Steel is allowed to complete its acquisition.
3. China Shores Up Ties With Africa Despite Slowing Economy and Friction Over Debt – Sha Hua and Gabriele Steinhauser, The Wall Street Journal, September 5, 2024
   The WSJ says that China is working to bolster trade ties while African nations seek balanced trade.
4. China offers Africa $51 billion in fresh funding, promises a million jobs – Reuters, September 5, 2024
   Reuters writes that China will provide African nations with $51 billion in funding over 3 years, denominated in RMB.
5. Could T-shirts be the way to industrialise an African nation? – David Pilling, Financial Times, August 29, 2024
   The FT explores how Benin is working to industrialize its economy. 

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Reconsidering the de minimis rule

Who loses and what is gained if the US, EU, and other economies curtail de minimis exceptions to customs rules? The Financial Times Editorial Board argues against lowering de minimis thresholds to tackle Shein, Temu, and the parcel wars.  Gary Clyde Hufbauer  and Megan Hogan of the Peterson Institute for International Economics find that getting rid of the rule would hurt consumers and small businesses. Pablo D. Fajgelbaum and Amit Khandelwal, writing for the National Bureau of Economic Research, analyze the value of de minimis imports. Morgan Lewis explains proposed changes to the US de minimis rules for imports.

Mentioned publications 

1. Shein, Temu and the parcel wars – The Editorial Board, Financial Times, July 5, 2024
   The FT editorial board argues that lowering de minimis thresholds is too blunt a tool for tackling the challenges of ultra-low-price retailers.
2. Proposal to get rid of duty-free imports would punish American consumers and small businesses – Gary Clyde Hufbauer and Megan Hogan, Peterson Institute for International Economics, October 2, 2023
   PIIE argues that such policies would result in a greater tariff burden on consumers and small businesses.
3. The Value of De Minimis Imports – Pablo D. Fajgelbaum and Amit Khandelwal, National Bureau of Economic Research, June 2024
   The authors find that this form of direct-to-consumer trade advantages poor consumers. 
4. US Senators Propose Changes to Section 321 De Minimis Imports – Morgan Lewis, August 28, 2024
   Morgan Lewis describes the latest efforts by US Senators to change de minimis rules.

More related analysis from HF:

• China EVs drive a widening gulf in transatlantic trade policy
• The Deglobalization Myth: How Asia’s supply chains are changing
• Killing MSME access to global trade

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