U.S. Treasury Secretary Janet Yellen warned of a possible significant response from China following any new U.S. tariff actions, just days before the Biden administration is expected to announce new tariffs targeting several key sectors.
Speaking to reporters after a broadband event in rural Fredericksburg, Yellen emphasized that any changes to tariffs, originally imposed under former President Donald Trump, would be strategically focused. “We’ve been clear that in reviewing it we may decide that it’s appropriate to reconfigure what’s been done in a more strategic way,” she said.
Yellen refrained from detailing the impending changes but assured that Chinese officials would be informed in advance. “President Biden believes that anything we do should be targeted to our concerns and not broad-based, and hopefully we will not see a significant Chinese response. But that’s always a possibility,” she told Bloomberg Television earlier on Monday.
The anticipated announcement, set for Tuesday, is expected to include a substantial hike in levies on electric vehicles, as well as tariffs on semiconductors, solar equipment, and medical supplies, according to sources who spoke to Reuters last week.
“I have been very clear in my engagement with the Chinese that we believe there needs to be a level playing field for competition, and that we have particular concern about clean energy, semiconductors, and areas where China has, through its policies, encouraged so much investment that it’s led to overcapacity,” Yellen said.
Despite the targeted nature of these actions, Yellen expressed hope that China would understand the rationale behind the U.S. measures and declined to predict potential retaliatory steps by Beijing. “We’re going to try to keep our actions targeted, and we’ll see what happens,” she said.
Yellen highlighted China’s deliberate industrial policy aimed at bolstering advanced manufacturing, which has led to global overcapacities threatening U.S. competitors. She pointed out that Chinese investment, once heavily directed towards its property sector, is now predominantly focused on advanced manufacturing due to issues in the real estate market.
Underscoring the U.S. commitment to maintaining trade relations with China and stabilizing bilateral ties, Yellen stressed the importance of open dialogue to address disagreements. Asked by Bloomberg if the U.S. sought a trade war with China, she responded, “We’re working to stabilize our economic relationship. We do not wish to disengage from China economically, but we do think that the playing field should be fair, and China engages in unfair practices like massive subsidies.”
