Treasury Secretary Yellen on why Biden is targeting Chinese manufacturing with new tariffs

Amna Nawaz:

President Biden announced a series of major tariffs today on several Chinese imports.

The world's two largest economic superpowers are colliding over the future of electric vehicles and other industrial sectors. It comes just about six months before the election, as both President Biden and former President Trump are battling to sell voters on their visions for the economy, manufacturing, and jobs.

Lisa Desjardins begins our coverage with this report.

(Applause)

Lisa Desjardins:

After reviewing former President Trump's tariffs on Chinese imports, President Biden is adding to them.

Joe Biden, President of the United States: I want fair competition with China, not conflict. And we're in a stronger position to win that economic competition in the 21st century against China than anyone else because we're investing in America again, in American workers.

Lisa Desjardins:

He's targeting Chinese manufacturing, especially green tech, hitting roughly $18 billion worth of goods annually, including a more-than-100 percent tariff on Chinese electric vehicles, nearly tripling the current amount.

Tariffs will also go up for solar cells to 50 percent, lithium ion batteries to 25 percent, and Chinese steel and aluminum products to 25 percent. Chinese authorities immediately called the U.S. hypocritical.

Wang Wenbin, Chinese Foreign Ministry Spokesman (through interpreter):

The United States is trampling on the principles of market economy and international trade rules. It is a blatant act of bullying and hegemony.

Lisa Desjardins:

But Biden is arguing that China is far worse, a global trade manipulator.

Joe Biden:

We're not going to let China flood our market.

Lisa Desjardins:

Biden there means the electric vehicle industry. China is overwhelming some world markets, selling E.V.s with a sticker price as low as $11,000. The U.S. says the Chinese state is making up the difference, artificially slicing prices. Europeans charge, it may be illegal.

In 2020, Biden once said he would end previous Chinese tariffs, but he is expanding them now while battling a political opponent who is aggressive on tariffs.

Donald Trump, Former President of the United States (R) and Current U.S. Presidential Candidate: China is eating our lunch right now.

Lisa Desjardins:

Trump spoke in New York today. His speeches have long focused on Chinese manufacturing as a threat. Both campaigns want to win in critical Rust Belt states. Trump wants much wider tariffs and, as this past weekend, tries to downplay Biden's plan.

Donald Trump:

He says he's going to put a 100 percent tariff on all Chinese electric vehicles. Isn't that nice? Should have done this four years ago, but Biden is not going to put this tariff on their gasoline-powered cars or any of the other products. You have to put it on other cars also, not just the electric cars.

Lisa Desjardins:

While some might win from tariffs, others in American business are shuddering. The U.S.-China Business Council said Trump's tariffs and Biden's new ones "ultimately make it harder for American companies to compete in the U.S. and abroad, cost American jobs and increase prices."

A heated U.S. political fight is woven into an escalating global trade war.

For the "PBS NewsHour," I'm Lisa Desjardins.

Amna Nawaz:

For a closer look into the administration's thinking behind these new import taxes, we are joined by Treasury Secretary Janet Yellen.

Madam Secretary, welcome back to the "NewsHour."

Janet Yellen, U.S. Treasury Secretary:

Thanks so much.

Amna Nawaz:

So, as you have seen, there have been some experts, some groups, the National Retail Federation among them, who have expressed concerns that it will be U.S. consumers who eventually end up paying for these tariffs.

As you know, polling shows that rising prices are voters' biggest concern right now. So I'd ask you to speak directly to them. Will American consumers bear the cost of these tariffs?

Janet Yellen:

I don't believe that American consumers will see any meaningful increase in the prices that they face.

President Biden announced tariffs on roughly $18 billion of imports from China. They're very carefully targeted at sectors that we're supporting through legislation that President Biden passed with Congress, the clean energy sector, semiconductors, sectors where we consider it critical to create good jobs.

We're seeing massive investment in manufacturing in these areas. And we think it's very important to protect our workers and our firms in these strategic sectors from the kind of dumping that results when China develops massive overcapacity in these areas.

And we're not alone. Japan and Europe, Mexico, India, Brazil, South Africa, other countries are all concerned. These are areas where the investments that we're making will ultimately result in lower prices.

Amna Nawaz:

I hear you saying they could ultimately end in lower prices, but you mentioned that consumers may not see any meaningful price increase.

Does that mean that people should brace for potentially some price increase?

Janet Yellen:

I don't think that anything will occur here that would be noticeable to the typical American family.

Mainly, these tariff increases serve to protect firms and workers that are being supported by the incentives, the tax incentives, and other incentives in the semiconductor and CHIPS Act and Inflation Reduction Act. These are sectors where American firms are gearing up production, are very able to compete, but they face an unlevel playing field.

Amna Nawaz:

Madam Secretary, your view on this has evolved. It was in July of 2021 when you were asked about the Trump era tariffs on China. And you said: "Tariffs are taxes on consumers. In some cases, it seems to me what we did hurt American consumers."

So what changed between then and now?

Janet Yellen:

Well, what we're talking about here are a targeted group of strategic sectors where we have developed a real overdependence on China.

We have vulnerabilities in our supply chains. We have made it a national priority to diversify our supply chains, so that we don't experience the same kinds of shortages that we did during the pandemic. And these are sectors that are core ones in a modern economy.

Amna Nawaz:

This does represent an escalation in what's been a sort of tit for tat with China.

And we should mention we got a statement from the Chinese Embassy here, in which they said that these are false narratives of overcapacity, as you mentioned earlier, made, in their words, to hinder China's high-quality development and scapegoat for their own — for the U.S.' own problems.

Are you worried about Chinese retaliation?

Janet Yellen:

I hope that the Chinese react in a rational way to what is a very targeted set of actions.

We have a deep trade and investment relationship with China. We think most of it is beneficial both to America and also to China, and most of it is unproblematic and uncontroversial. And, at this point, China's capacity to produce, say, solar panels is twice global demand for these panels.

And what that means is that prices will drop to levels that make American firms uncompetitive. And I have made our concerns in this area very clear. I have been very straightforward and public about it, so this should not be a surprise. And China itself has mentioned that it is concerned about overcapacity.

Amna Nawaz:

Doesn't this in many ways work crosscurrent to President Biden's larger goals of addressing climate change?

I mean, take Chinese electric vehicles, for example. Yes, they are cheaper, but if more people end up buying them, doesn't that go a long way towards addressing climate change?

Janet Yellen:

Well, we are doing a great deal to support the electric vehicle industry in the United States and to encourage adoption by consumers of E.V.s.

That includes building a network of charging stations all across the country, something that's taking place right now because of the bipartisan infrastructure law. And consumers are eligible for up to $7,500 subsidies to buy electric vehicles.

We know that, over time, as our firms develop experience at producing these cars and we have battery factories that are — we have a new battery belt that's really developed throughout the Midwest, that the prices of these vehicles will come down over time.

The programs that we're following are the best of both worlds. They're addressing emissions in a forceful way and also creating good jobs for Americans who need them.

Amna Nawaz:

That is U.S. Treasury Secretary Janet Yellen joining us tonight.

Madam Secretary, thank you. Good to speak with you.

Janet Yellen:

Thank you.