Unlock the Editor’s Digest for free
Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
Janet Yellen has urged the EU to join US efforts to curb Beijing’s green technology exports, warning that a glut of cheap Chinese goods could threaten the survival of factories around the world. could threaten the world.
The US and its Western allies must respond “in a united way” to China’s growing manufacturing power or risk endangering 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 would represent “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. in an effort to protect the industry in states such as Pennsylvania and Michigan, where President Joe Biden and Republican Donald Trump Trump wooing workers. vote in the November presidential election.
She said the tariff increases, which included a quadrupling of the tariff on Chinese electric vehicles to 100 percent, were “strategic and targeted steps.”
Yellen’s speech in Frankfurt, before an audience that included 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 trade together, but we want it to be fair and according to the rules,” she told the Financial Times on Tuesday before Yellen’s comments.
Responding to Biden’s announcement of US tariff increases last week, German 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 dismantle global trade.”
Unlike Washington, Brussels, which exports a greater share of its own goods to China, has sought to tackle the flood of cheap Chinese solar panels, wind turbines and electric vehicles through studies and reports that it says comply with the rules of the World Trade Organization. .
However, Scholz, von der Leyen and French President Emmanuel Macron have echoed Yellen’s warnings to Beijing – made during a visit in April – that massive Chinese manufacturing subsidies risk exacerbating geopolitical tensions.
“China’s industrial policy may seem far away as we sit here in this room, but if we do not respond strategically and unitedly, the viability of businesses both in our countries and around the world could be at risk,” Yellen said on Tuesday. at the Frankfurt School of Finance & Management.
“Support for low- and middle-income countries and workers around the world is essential for 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 fueled investment in US manufacturing at the expense of Europe.
“We don’t just create opportunities at home. US-EU trade in green energy products exceeded $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, with more than $3 trillion in investment opportunities annually between now and 2050, mitigating climate change was compatible with increasing energy security and boosting economic growth.
“As we look ahead, there is room for much more joint and complementary action that will advance these three objectives,” she said. “The IRA is working, and we welcome similar actions around the world, including the European Green Deal.”
Yellen also called for greater US-EU cooperation on critical minerals, saying both jurisdictions’ supply chains were “over-concentrated in China”, and on the evolution of multilateral development banks such as the World Bank, artificial intelligence and semiconductors. .