Treasury Secretary Janet Yellen was in Europe this week on a charm offensive from Washington, trying to convince leaders there to join forces in going after China on trade.
“The world has changed tremendously in my lifetime and will continue to evolve,” she said at the Frankfurt School of Finance and Management in Germany.
The entire point of her trip was to reiterate that the Biden administration does not want to go it alone on China (or Russia, which was another topic in Germany on Tuesday). Europe was a key ally for U.S.-China policy to be effective.
“We must continue to collaborate as we navigate a shifting global economic landscape. This includes our approaches to the People’s Republic of China. The U.S. and Europe both recognize that China’s tremendous rise—from representing 3 percent of the global economy to 20 percent—means that it will help shape the global economy,” Yellen said.
Yellen also emphasized the line of thinking held by many multinational companies that she was not for decoupling from China, but wants to de-risk. This de-risking concept is taking hold in Europe, with EU President Ursula Von Der Leyen using it in March 2023 during a European Commission speech in Brussels ahead of a trip to Beijing.
Yellen alluded to the pandemic being the clarion call to shift supply chains out of China, something the Trump administration tried doing with the Section 301 tariffs.
To get out of China, Yellen said “friend-shoring” supply chains and “deepening economic ties with a wide range of partners and allies that advance our energy and economic security” were the direction to go.
The U.S. and Europe are trying to make China imports less attractive, with the U.S. ahead on this issue so far. Last week, Biden announced a four-year extension of the Section 301 tariffs. The EU, led by France, says it wants to investigate Chinese subsidies to things like electric vehicles, with the CEO for wind turbine manufacturer Siemens calling for tariffs.
The bulk of the tariff discussion from Yellen centered on the new manufactured goods the West is relying on to power its post-fossil fuels energy grid and transportation sector. That was top-of-mind and a driving force behind the new tariffs enacted last week.
Tax Incentives Are Working
Yellen said tax incentives for manufacturers of green tech in the Inflation Reduction Act (IRA) were working.
“The IRA is not a turn toward American protectionism,” she said. Europe was first to squawk about the IRA when it became law in 2022.
U.S.-EU trade in green energy products exceeded $2 billion in 2022, and European countries can be leaders in this area, she said. BMW, for example, is investing $1.7 billion in South Carolina because of the tax incentives and other policy restrictions in the law.
“The thermal processing equipment in the Suniva factory I visited in March is supplied by Germany’s Centrotherm—just one example of potential opportunities for Europe. The transition to green energy is now increasingly recognized as the greatest economic opportunity of the 21st century, with an estimated over $3 trillion in investment opportunities each year between now and 2050. Achieving our climate goals is compatible with increasing energy security and driving growth,” Yellen said in keeping with the green tech themes of her China talk on Tuesday.
The U.S. has been trying to enlist Europe in its China fight for the last three years.
Xi Jinping recently visited France and German Chancellor Olaf Scholz visited China.
The meetings between top EU leaders and Xi Jinping come at a time when Yellen, fresh off her trip from China, is talking about tariffs on solar and EVs.
“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,” she said.
This line of thinking is spreading in Washington, though for the time being it is mainly part of the green tech industries benefiting from the IRA rather than manufacturing in general. The persuasion that seems to work best with liberal internationalists is the economic disruption to the global economy caused by China’s overproduction. This is the “balanced trade” argument touted by economists Michael Pettis and Brad Setser.
Still, convincing Europe is not easy.
In April, Macron said Europe faces a “great risk” if it “gets caught up in crises that are not ours, which prevents it from building its strategic autonomy.” Macron was talking about Taiwan here and not wanting to irk Beijing on that topic, something Washington has no problems doing.
Scholz has been more emphatic. He is against tariffs.
“Protectionism only makes everything more expensive in the end,” Scholz said last week at the Chamber of Commerce and Industry conference in Berlin.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Janet Yellen Tries Persuading Europe To Embrace Washington’s View Of China
Treasury Secretary Janet Yellen was in Europe this week on a charm offensive from Washington, trying to convince leaders there to join forces in going after China on trade.
“The world has changed tremendously in my lifetime and will continue to evolve,” she said at the Frankfurt School of Finance and Management in Germany.
The entire point of her trip was to reiterate that the Biden administration does not want to go it alone on China (or Russia, which was another topic in Germany on Tuesday). Europe was a key ally for U.S.-China policy to be effective.
“We must continue to collaborate as we navigate a shifting global economic landscape. This includes our approaches to the People’s Republic of China. The U.S. and Europe both recognize that China’s tremendous rise—from representing 3 percent of the global economy to 20 percent—means that it will help shape the global economy,” Yellen said.
Yellen also emphasized the line of thinking held by many multinational companies that she was not for decoupling from China, but wants to de-risk. This de-risking concept is taking hold in Europe, with EU President Ursula Von Der Leyen using it in March 2023 during a European Commission speech in Brussels ahead of a trip to Beijing.
Yellen alluded to the pandemic being the clarion call to shift supply chains out of China, something the Trump administration tried doing with the Section 301 tariffs.
To get out of China, Yellen said “friend-shoring” supply chains and “deepening economic ties with a wide range of partners and allies that advance our energy and economic security” were the direction to go.
The U.S. and Europe are trying to make China imports less attractive, with the U.S. ahead on this issue so far. Last week, Biden announced a four-year extension of the Section 301 tariffs. The EU, led by France, says it wants to investigate Chinese subsidies to things like electric vehicles, with the CEO for wind turbine manufacturer Siemens calling for tariffs.
The bulk of the tariff discussion from Yellen centered on the new manufactured goods the West is relying on to power its post-fossil fuels energy grid and transportation sector. That was top-of-mind and a driving force behind the new tariffs enacted last week.
Tax Incentives Are Working
Yellen said tax incentives for manufacturers of green tech in the Inflation Reduction Act (IRA) were working.
“The IRA is not a turn toward American protectionism,” she said. Europe was first to squawk about the IRA when it became law in 2022.
U.S.-EU trade in green energy products exceeded $2 billion in 2022, and European countries can be leaders in this area, she said. BMW, for example, is investing $1.7 billion in South Carolina because of the tax incentives and other policy restrictions in the law.
“The thermal processing equipment in the Suniva factory I visited in March is supplied by Germany’s Centrotherm—just one example of potential opportunities for Europe. The transition to green energy is now increasingly recognized as the greatest economic opportunity of the 21st century, with an estimated over $3 trillion in investment opportunities each year between now and 2050. Achieving our climate goals is compatible with increasing energy security and driving growth,” Yellen said in keeping with the green tech themes of her China talk on Tuesday.
The U.S. has been trying to enlist Europe in its China fight for the last three years.
Xi Jinping recently visited France and German Chancellor Olaf Scholz visited China.
The meetings between top EU leaders and Xi Jinping come at a time when Yellen, fresh off her trip from China, is talking about tariffs on solar and EVs.
“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,” she said.
This line of thinking is spreading in Washington, though for the time being it is mainly part of the green tech industries benefiting from the IRA rather than manufacturing in general. The persuasion that seems to work best with liberal internationalists is the economic disruption to the global economy caused by China’s overproduction. This is the “balanced trade” argument touted by economists Michael Pettis and Brad Setser.
Still, convincing Europe is not easy.
In April, Macron said Europe faces a “great risk” if it “gets caught up in crises that are not ours, which prevents it from building its strategic autonomy.” Macron was talking about Taiwan here and not wanting to irk Beijing on that topic, something Washington has no problems doing.
Scholz has been more emphatic. He is against tariffs.
“Protectionism only makes everything more expensive in the end,” Scholz said last week at the Chamber of Commerce and Industry conference in Berlin.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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