The European Chamber’s Statement on US-China Trade Conflict and Potential Escalation of Tariffs Go back »

2018-08-24 | All chapters

Background

On 20^th August 2018, the Section 301 Committee of the US Trade Representative began public hearings on a proposed levy on approximately USD 200 billion worth of American imports from China. The planned 10-25 per cent duties on a wide variety of Chinese products comes after the initial imposition of USD 34 billion and the subsequent duties levied on an additional USD 16 billion on 23^rd August.  

Stance

The European Chamber shares many of the United States’ concerns over certain practices by the Chinese Government but is highly concerned about the prospects of further escalation of the current tit-for-tat exchange of tariffs. Tariffs are unlikely to resolve complex issues such as unfair technology transfers, market access barriers and a burdensome and unequal regulatory environment. These are the issues that affect European business, and which require a solution, but levying even more tariffs will only harm global markets and disrupt supply chains in unpredictable ways.

As two of the three largest economies in the world, there are very few companies without at least one upstream supplier or downstream purchaser in either the US or China that are left standing on the side-lines. As a result, the wide scope of products targeted by both countries in a tit-for-tat exchange will leave few industries unaffected as collateral damage spreads through the highly globalised economy.

Beyond the obvious economic costs is also a potential great loss to sustainable global development. Many European companies have gone to great lengths to ensure that their global supply chains adhere to strict standards when it comes to labour practices, environmental compliance, ethics and sustainability. The due diligence of every link in the supply chain involves a great deal of arduous work, which is done on the assumption that a stable global trade regime exists and its norms of fairness continue to be abided by. Having to adjust supply chains due to the resulting economic stress of an escalation of tariffs could put producers back to square one in this respect.  

The European Chamber urges all parties to refrain from further proliferation of tariffs and to resort to less crude methods. Deeper engagement should be pursued bilaterally where possible and multilaterally where necessary.

“This trade conflict between the US and China has far reaching implications for the continued operation of supply chains globally,” said Mats Harborn, President of the European Chamber of Commerce in China. “While we share many of the US’ concerns, it is highly problematic that of all the tools that could be utilised to resolve the situation, it is the hammer that is receiving the most use.”

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