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Janet Yellen called on the EU to join US efforts to curb Beijing’s green tech exports, warning that an oversupply of cheap Chinese goods could threaten the existence of factories worldwide.
The United States and its Western allies must respond “uniformly” to China’s growing manufacturing power or endanger their own industries, the finance minister said in a speech in Germany on Tuesday.
Yellen also rejected criticism from European allies that the U.S.’s sweeping tax breaks and subsidies for green manufacturing represented “a turn toward American protectionism.”
The Treasury secretary spoke just a week after the White House sharply raised tariffs on Chinese cleantech exports to the U.S. to protect the industry in states like Pennsylvania and Michigan, where President Joe Biden and Republican Donald Trump are vying for workers’ votes for the presidential election in November.
She said the tariff increases, which included quadrupling the rate for Chinese electric vehicles to 100 percent, were “strategic and targeted steps.”
Yellen’s speech in Frankfurt to an audience with German Finance Minister Christian Lindner comes as Europe seeks a middle ground amid rising 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 act together, but we want it to be fair and compliant,” she told the Financial Times on Tuesday before Yellen’s remarks.
Responding to Biden’s announcement of US tariff increases last week, Chancellor Olaf Scholz said Western brands were responsible for “at least 50 percent of electric vehicle imports from China.” Swedish Prime Minister Ulf Kristersson said it was “a bad idea to start reducing world trade.”
Unlike Washington, Brussels, which exports a larger share of its own goods to China, is trying to counter a flood of cheap Chinese solar panels, wind turbines and electric vehicles through research and reports that it says are in line with World Trade Organization rules.
However, Scholz, von der Leyen and French President Emmanuel Macron have reiterated Yellen’s warnings to Beijing during a visit in April that China’s subsidies for bumper production risk exacerbating geopolitical tensions.
“China’s industrial policy may seem distant to us in this room, but unless we respond strategically and unitedly, the viability of companies in both our countries and around the world could be at risk,” Yellen said Tuesday at the Frankfurt School.
“Supporting low- and middle-income countries and workers around the world is critical to the strength of the global economy,” she added.
The US Treasury secretary also hit back at EU claims that the Biden administration’s Inflation Reduction Act had boosted investment in US 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 worldwide, benefiting people and economies around the world.”
She added that mitigating climate change, with more than $3 trillion in investment opportunities per year through 2050, is consistent with increasing energy security and promoting economic growth.
“As we look to the future, there is scope for much more joint and complementary actions that will advance these three goals,” she said. “The IRA is working and we welcome similar measures around the world, including the European Green Deal.”
Yellen also called for greater cooperation between the US and EU on critical minerals, saying both jurisdictions’ supply chains are “over-concentrated in China” as well as in the development of multilateral development banks such as the World Bank, artificial intelligence and semiconductors.