Insights丨Daryl Guppy: Overcapacity? New tariffs? The U.S. is returning to the bad old days

By Chen Tianhao

(ECNS) -- On top of existing tariffs under Section 301, the United States on Tuesday announced new tariffs on a variety of imports from China, including electric vehicles (EVs), lithium batteries, photovoltaic cells, critical minerals, semiconductors, steel and aluminum.

The new tariffs and hyped-up “China’s overcapacity” is part of an overall American strategy to pull China back, to prevent China's development, and to halt its progress, said Daryl Guppy, former board member of the Australia China Business Council and Australian ACBC delegate at the Silk Road Chamber of International Commerce, in a recent interview with China News Network.

Under the pretext of “overcapacity”, the U.S. targets China’s development

U.S. Treasury Secretary Janet Yellen said on Tuesday that the IMF is not sufficiently focused on the problem of "Chinese overcapacity", which is contrary to economic principles and common sense. Guppy noted that the reason behind the American charge of overcapacity is that “this relates to industries where America and Europe have chosen not to engage in previous development.”

China has been developing electric vehicles for many years, so the countries open to Chinese exports can fill gaps left by their own lack of development, according to Guppy, who added that “from what we see in the U.S. Inflation Reduction Act, it is really just another name for protectionism and tariff support, certainly a double standard.”

“‘Overcapacity’ is part of an overall American strategy to pull China back, to prevent China's development, and to halt its progress,” Guppy noted, “It is anti-competitive at its heart.”

Chinese Foreign Ministry spokesperson Wang Wenbin also noted on the regular press conference on Tuesday that “based on U.S. logic, U.S. subsidies are ‘investment in critical industries, whereas other countries’ subsidies are seen as ‘worrying unfair competition’; U.S. exports with comparative advantage constitute ‘free trade,’ whereas other countries’ exports with comparative advantage are signs of ‘overcapacity’”.

China's EV industry development is good for the world

Guppy further expressed that “there is no danger that supply will exceed demand as we move towards 2050 climate targets.” However, the targets can’t be met by deciding to develop solar panels in Western countries that are more expensive and probably less efficient than what China has done, said Guppy. He believes that it would be much better to take an operative approach with China.

In addition, Guppy refuted the idea that Chinese EVs are flooding the market. “It shows there is a tremendous demand for electric vehicles which China is able to meet,” Guppy explained, “China has spent a decade or more in developing efficient production methods for electric vehicles, while Europe and the United States have just started understanding this technology and developing it.”

So, it’s not fair and reasonable for them to prevent other countries from using Chinese EVs, and to use their EVs that are more expensive and less efficient, Guppy said, adding “because that's what suits their economy and they really don't care about overall climate objectives and deny the fact that Chinese EVs are fast, efficient, effective, and at a competitive price.”

China’s development in this area should be a good thing for the world, Guppy claimed.

The U.S.is returning to the bad old days

“Unfortunately, what we are seeing in a global basis is an increase in trade protection barriers,” Guppy said, “this is a bad path to be going down, because we are returning to the bad old days of tariffs, protectionism, high prices for low quality.”

“Hopefully we can stop that process by standing up to these protectionist policies which are increasingly being adopted by Western countries,” Guppy concluded.