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NUR ANIS SHAFIQAH

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NUR ISYA NATASYA

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LUQMANUL HAKIM

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NURMASNAGIWA ARNIE BINTI ROSLI

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Intan Nadia

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Nur izza hana

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Nur Amira Irani binti Hamadi

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This monthly roundup brings you a selection of the latest news and updates on global trade.

Top international trade stories: US imposes new tariffs on China imports; Surge in demand for green energy minerals; South Africa considers lodging complaint with WTO over EU's carbon border tax.

1. US hikes tariffs on Chinese imports

US President Joe Biden announced new charges on imports including electric vehicle (EV) batteries, computer chips and medical products. According to Reuters, the new measures affect $18 billion in imported Chinese goods.

The tariff hikes see the rate on EVs rising to 100% while semiconductors, solar cells for photovoltaic panels, and syringes and needles now attract a rate of 50%.

The US has hiked import tariffs on a range of Chinese goods. Image: Visual Capitalist

Data from the US Census Bureau shows goods worth $427 billion were imported from China to the US, while $148 billion of goods were exported from the US to the world's second-largest economy. This trade deficit, which has endured for several decades, has become an increasingly contentious issue in Washington, according to Reuters.

In what may point to further escalation of the tensions over trade, on 21, May US Treasury Secretary Janet Yellen used a speech at a meeting of G7 finance ministers in Frankfurt, Germany, to call on European countries to back the US stance on China's industrial overcapacity in a "strategic and united way".

2. Demand surges for critical minerals

The demand for critical minerals is surging as manufacturers scramble to secure supplies to drive the green energy transition.

According to the International Energy Agency's (IEA) Critical Minerals Outlook, 2024: "Demand for critical minerals experienced strong growth in 2023, with lithium demand rising by 30%, while demand for nickel, cobalt, graphite and rare earth elements all saw increases ranging from 8% to 15%."
- World Eonomic Forum white paper: Translating Critical Raw Material Trade into Development Benefits
Increased demand for energy-related critical raw materials could bring development opportunities for resource-rich countries.

The IEA cites the need for raw materials to make batteries for EVs and to meet requirements for the manufacture of solar panels, wind turbines and other green energy technology as the drivers behind this growth.

The price of critical minerals is falling despite surging demand. Image: International Energy Agency

Despite the rise in demand for critical minerals, market prices have fallen dramatically. The spot price of lithium fell by 75% in 2023, with cobalt, nickel and graphite costs dropping 30-45%, according to the IEA. It adds that a spike in the supply is responsible for the fall in prices but emphasizes that prices are vulnerable to volatility given the fragile nature of some mineral supply chains.

"Increased demand for energy-related critical raw materials could bring development opportunities for resource-rich countries," the paper states. "Trade deals need to be better leveraged to this end."

3. News in brief: Trade stories from around the world

WTO data reveals a radical shift in the transport sector. By the end of 2023, EVs accounted for more than a third of all car imports in value terms. China exported over 1.5 million battery EVs in 2023, meaning its factories produced one out of every four exported worldwide that year.

Six Western Balkan countries aspiring to join the European Union are discussing how to speed up necessary reforms, create their own single market and ultimately join the bloc. The countries - Albania, Bosnia, Kosovo, Montenegro, North Macedonia and Serbia - were promised EU membership years ago but the accession process has slowed to a crawl.

A trade agreement between the European Union and New Zealand entered into force this month. In recent years, trade in goods between the two partners has risen steadily, hitting almost €9.1 billion in 2022. According to an EU assessment, the agreement is expected to increase trade between the EU and New Zealand by 30%.

4. More on trade from Agenda

As demand for critical raw materials surges worldwide, further insights are needed to determine what trade and investment facilitation actions would be sufficient to whet investor appetite for specific mining activities or the ensuing value chain. As debates in this area continue, we asked several thought leaders for their perspectives on trade, critical minerals and sustainable development. Here's what they had to say.

Growth in global trade could more than double in 2024 as inflation falls and the US economy gathers pace. That's the view of three major international economic organizations - the International Monetary Fund, the Organization for Economic Co-operation and Development and the World Trade Organization - which all forecast an uptick in global trade flows in 2024.

Rising geopolitical tensions are a major risk to global trade in 2024, according to a new World Economic Forum white paper on the cost of geopolitical rivalries. The paper explores the pressures caused by political instability and provides an analysis of how corporations and policy-makers can best prepare for and respond to the various geopolitical pressures fragmenting the global economy.

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US imposes new tariffs on China imports; Surge in demand for green energy minerals; South Africa considers complaining to WTO over EU's carbon border levy.

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Illustration: Liu Rui/GT

The US has made the decision to apply 100 percent tariffs to electric vehicles (EVs) coming from China. The question is, why now? The other question is, what are the implications going forward for China and the US?

The issue about EVs is at the forefront in the US political circle, as it is now widely recognized that China has become the dominant EV producer globally. In order to protect the US auto industry, tariffs have been put in place. However, in the long term, this strategy is not going to be effective, as those in the political world often fail to consider long-term consequences.

If you read the press over time, the US has basically taken the position that China is subsidizing many industries, especially the EV industry, allowing China to sell products at lower prices . That's not the reality of what has happened in China. What has happened in China is the same model that has occurred in major corporations around the world. They look at the future, consider where the opportunities are, and assess their relative strategic position to invest in R&D, talent and partnerships to bring their vision to fruition. That's exactly what China has done.

The Chinese EV industry is growing very rapidly and becoming self-sufficient. Therefore, the US first and foremost needs to swallow its pride and learn from what the Chinese have done, which may not be easy.

China is in an ideal strategic position to offer the best product at the best price globally. China has already started to reach technology agreements with some countries that give them access to EV technology at a cost. The rest of the world is recognizing that China has a significant head start in this area, and frankly, it's much better to work with China in EVs rather than attempting to compete against it from scratch.

China has enormous opportunities going forward. For those countries that want to protect their auto industry jobs, China could clearly, as other companies have done, set up manufacturing facilities locally to ensure local employment. China has more than enough opportunities and a great deal of momentum in terms of the technological advantages, and China is rapidly building the brand recognition.

Then, where does the US go from here? The core challenge the US faces is that it has adopted a containment strategy toward China to both block China's access to the US' high-end technology and slow China down. The problem is, it's very difficult to both contain and compete, because it's a very different mindset. So, what the US needs to do is to recognize that containment is not going to be possible. What the US has to do, first and foremost, is change its mindset, and my suggestion is that it should compete, not contain.

Overall, putting tariffs and preventing US consumers from gaining access to Chinese EVs is not going to do anything for a competitive position. The long-term impact is going to be determined by who sets out to play in the EV world and makes investments in talent, innovation and partnerships that are required to be successful.
The author is a speaker on China-US relations and author of the book Powerful, Different, Equal: Overcoming the misconceptions and differences between China and the US. opinion@globaltimes.com.cn

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US should embrace competition, not contain China, in electric vehicle development

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In terms of electric vehicle development, the US should compete with, not contain China. Overall, putting tariffs and preventing US consumers from gaining access to Chinese EVs is not going to do anything for a competitive position.

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https://www.theguardian.com/technology/article/2024/may/24/tesla-boss-elon-musk-criticises-us-tariffs-chinese-electric-vehicles-distort-market

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China's EV Sector: Charting a path despite U.S. sanctions

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China's electric vehicle sector has enjoyed spectacular growth over the past few years. Chinese EVs have attracted much attention, including curious customers and the U.S. government. The latter claims the EV sector has an overcapacity and is wary of the potential effects of Chinese EV exports to the U.S.

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By Jurica Dujmovic

Biden administration is confident that U.S. car companies will adapt to new tariffs on Chinese-made products

As automobiles and drivers accelerate toward an electric future, a rising cost of electric vehicles (EVs) casts a shadow over the dream of widespread sustainable transportation.

At the heart of this price surge are the intensifying political tensions between the U.S. and China, particularly when it comes to EV battery production and supply chains. The tensions have mounted further after U.S. President Joe Biden's recent announcement of a 100% tariff on Chinese-made electric vehicles.

As the U.S. and China navigate their own technological and political ambitions, the repercussions are being felt from factory floors to car showrooms. Let's start with the obvious: The Biden administration's rules for EV tax credits present a significant change compared to earlier legislation. Vehicles are disqualified if any of their suppliers have even minimal ties to Beijing - such as manufacturing parts in China or having a small percentage of their board controlled by Chinese interests. The stringent approach extends even to instances where U.S. suppliers use licensed Chinese technology??.

Such measures are not isolated - earlier U.S. Treasury Department rules that focused on domestic manufacturing had already excluded many vehicles made by European, Japanese, and South Korean automakers. As a result, only about 22 electric and plug-in hybrid models currently qualify for the EV tax credit, a stark contrast to more than 100 models available on the market??.

The rules offer some flexibility. Automakers have a two-year phase-in period to comply with regulations concerning certain difficult-to-trace battery components??. Starting in 2024 and 2025, automakers will be prohibited from sourcing any battery parts or critical minerals from "foreign entities of concern" (a category that includes China),?? which would add another layer of complexity and potential costs to their operations.

Promoting the use of electric cars is a key component of the Biden administration's broader climate agenda, and the tax credit, which can reduce the cost of an EV by up to $7,500, is seen as a vital tool to make them more accessible. However, the implementation of domestic content restrictions under the 2022 U.S. Inflation Reduction Act, aimed at reducing dependence on the Chinese EV supply chain, has significantly limited the impact of any benefit, putting it almost entirely into question. Regardless, Biden administration officials remain confident that the car industry will adapt, citing significant investments into new U.S. manufacturing facilities??.

Yet both U.S. automakers and the EV industry have expressed concerns, arguing that they need more time to fully remove Chinese elements from their supply chains despite significant investments in expanding U.S. operations??.

U.S. auto giant Ford Motor (F) has even argued that its partnership with China's Contemporary Amperex Technology Co. (CN:300750) does not funnel taxpayer dollars to Beijing and is crucial for manufacturing next-gen lithium, iron, and phosphate batteries in the U.S., highlighting the complexities of international collaborations??.

The Chinese Ministry of Commerce has condemned the U.S. regulations as discriminatory against Chinese companies and a violation of World Trade Organization (WTO) rules. The ministry views the exclusion of Chinese suppliers from U.S. tax benefits as a non-market-oriented policy??.

Trade tensions and new tariffs

The Biden administration's new tariff on Chinese-made electric vehicles is part of a broader package of measures aimed at protecting U.S. manufacturers from cheap imports, significantly escalating the trade conflict between the two nations. This move is expected to drive up the cost of Chinese-made EVs, making them less competitive in the U.S. market, and could potentially lead to retaliatory actions from China, further complicating the global EV supply chain.

In addition to the 100% tariff on Chinese EVs, the Biden administration has implemented several other tariff hikes relevant to the EV industry:

Lithium batteries: Tariffs on lithium batteries have been raised to 25% from 7.5%. This hike is significant as lithium batteries are a crucial component of EVs, and the increased cost will likely affect the overall price of electric vehicles.Critical minerals: A new 50% tariff has been imposed on critical minerals, which were previously taxed 25%. These minerals are essential for battery production and other key EV components.Solar cells: Tariffs on solar cells, which are integral to many green energy technologies, including some EV charging solutions, have been doubled to 50% from 25%. The increase could impact the cost and availability of renewable energy solutions in the U.S.Semiconductors: Tariffs on semiconductors have also been doubled to 50% from 25%. Given the global chip shortage, this increase could further strain the supply chain for critical electronic components in EVs and other technologies.Steel and aluminum: Tariffs on steel and aluminum, which range from 0% to 7.5%, will rise to 25%. These materials are vital for vehicle manufacturing, and the increased costs could affect the production costs of EVs.

Powering up

Despite recent tensions, China continues to dominate the global electric vehicle (EV) market. As of the first quarter of 2024, China maintains its leadership position, accounting for a substantial share of global EV sales. The country's EV market saw significant year-over-year growth of 31%, underscoring its critical role in the global EV sector.

In the first quarter of 2024, global EV sales grew by 21% compared to the same period in the previous year, with China contributing significantly to this increase. Specifically, battery electric vehicles (BEVs) accounted for 64% of the units sold globally, while plug-in hybrid electric vehicles (PHEVs) made up the remaining 36%??.

China's dominance is also reflected in the performance of its leading EV battery manufacturers. Contemporary Amperex Technology and BYD (CN:002594) continue to be pivotal, with BYD experiencing a 13% year-over-year growth in the first quarter. Additionally, BYD's robust export performance, particularly in Southeast Asia, highlights the global demand for Chinese EVs?.

In response to an evolving global landscape and U.S. policies, Chinese battery firms are strategizing to maintain their competitive edge. They are actively seeking to set up factories in the U.S. and build partnerships with car manufacturers to continue qualifying for the EV tax credit. Yet this process isn't going smoothly. Ford's plan to build a $3.5 billion EV battery factory in Michigan with Contemporary Amperex Technology was paused due to scrutiny from U.S. politicians??.

It's no wonder automakers want to pair up with Contemporary Amperex Technology - in terms of innovation, the company is at the forefront. In 2022, it announced the mass production of Qilin - its latest generation battery product - was scheduled to start in 2023. As of 2024, the company has begun full-scale production of the Qilin batteries, which offer greater efficiency and enable electric cars to drive more than 1,000 kilometers (621 miles) on a single charge.

Meanwhile, China's overall EV market is experiencing a considerable growth. With an estimated 500 EV manufacturing companies, China is focusing on developing sustainable transportation solutions for both personal and commercial use. One example of this is the market share of light electric commercial vehicles, which has significantly increased thanks to ample government help spurring the development and introduction of new models??.

Another reason why China is increasing electric car sales is to reduce its dependence on oil imports. Chinese OEMs are focused on developing more efficient battery EVs and enhancing vehicle systems, particularly e-powertrains, to drive market growth??.

However, China's rapid expansion has led to significant overproduction. The country has produced more EVs than it can sell domestically, which has resulted in an oversupply. Chinese manufacturers benefit from substantial government subsidies, which help them produce vehicles at lower costs and often lead to dumping excess vehicles in foreign markets at heavily discounted prices. This overflow of supercheap cars, sometimes of questionable quality, poses a threat to the U.S. market, potentially causing irreparable damage to American EV makers.

The geopolitical tensions between the U.S. and China have led to significant shifts in the global supply chains for EV batteries. South Korean companies including LG (KR:003550), Samsung Electronics (KR:005930), and SK Innovation (KR:096770) are emerging as competitive alternatives to Chinese batteries, but not without challenges as some of them, like SK Innovation's SK On, are forced to look outside China for materials for battery production??.

The prices of crucial minerals have seen considerable fluctuations as well - lithium carbonate prices nearly doubled between early 2022 and 2023. In 2022, the average battery price was about $150 per kWh, with pack manufacturing costs showing a downward trend compared to cell production costs??.

The Biden administration's focus on establishing domestic battery production and the Chinese response to set up manufacturing facilities in the U.S. to qualify for tax credits could create a geographical imbalance, which could in turn lead to disparities in EV availability and pricing.

Ultimately, rising costs and limited options could spoil the dream of widespread sustainable transportation, as consumers find it difficult to switch from fossil fuel-powered vehicles to electric alternatives.

More: The average price of EVs is dropping-here's how much

Also read: Power demand from AI, EVs and Big Tech is now the energy sector's No. 1 concern

-Jurica Dujmovic

(MORE TO FOLLOW) Dow Jones Newswires

05-25-24 1114ET

Copyright (c) 2024 Dow Jones & Company, Inc.

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U.S.-China tensions are blocking the road for EV manufacturers

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By Jurica Dujmovic Biden administration is confident that U.S. car companies will adapt to new tariffs on Chinese-made products As automobiles and drivers accelerate toward an electric future, a rising cost of electric vehicles (EVs) casts a shadow over the dream of widespread sustainable transportation.

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International Business and Global Strategy ( PDFDrive.com )

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German influence helped shape America | ShareAmerica

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This aerial photo shows cars to be loaded for export at Yantai Port in east China's Shandong Province, May 9, 2023. (Photo by Tang Ke/Xinhua)

BEIJING, Dec. 11 (Xinhua) -- China's State Council has issued a series of measures to accelerate the integrated development of domestic and foreign trade.

This acceleration is essential for the construction of a new development pattern and the promotion of high-quality development, and it also plays an important role in the promotion of economic development, the expansion of domestic demand and the stabilization of enterprises, according to the State Council.

The measures will improve the alignment of domestic and foreign trade rules and systems, including supervision, the convergence of standards and the facilitation of smooth domestic and foreign trade resource flows.

The measures will also promote the coordination of domestic and foreign market channels, improve the environment for the integrated development of domestic and foreign trade, and accelerate integrated development in key areas, the State Council said.

China will also strengthen fiscal and financial support for the integrated development of domestic and foreign trade, it added. ■

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Update: China issues measures to accelerate integrated development of domestic, foreign trade

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Update: China issues measures to accelerate integrated development of domestic, foreign trade-

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For merchandise trade, top exports and imports are broken down by agricultural and non-agricultural categories. For trade in services, data is provided for transport, travel and other commercial services. Statistics on intellectual property, such as patent and trademark applications, are also provided.

The profiles are available for all WTO members and observers as well as for other selected economies, providing a concise overview of global trade.

The publication can be downloaded in English, French and Spanish. Printed copies will be available in November.

Additional data are available through the WTO statistics webpage, the WTO Stats Portal and the WTO Stats Dashboard, a data visualization tool that provides graphical representations of the data presented in Trade Profiles.

Short-term trade data is also available through the WTO Stats Portal. Direct downloads of annual data on merchandise and commercial services trade may be found here.

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WTO issues new edition of Trade Profiles

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The WTO issued today (31 October) the 2023 edition of Trade Profiles, an annual publication providing key data on merchandise trade and trade in commercial services for 197 economies. Each two-page profile provides a breakdown of the economy's major exports and imports and its main trading partners.

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China remains a key market for Apple, but the company has faced scrutiny and competition from Huawei. The Chinese smartphone market is in a slump, which could impact iPhone 15 sales. (Bloomberg)

China remains a key market for Apple, but the company has faced scrutiny and competition from Huawei. The Chinese smartphone market is in a slump, which could impact iPhone 15 sales. (Bloomberg)

Apple's iPhone 15 drew mixed reactions in its third-largest market of China on Wednesday, with many online users liking its faster chip and improved gaming capabilities while others preferred Huawei's new smartphone.

China remains key for the U.S. tech giant, which unveiled its new iPhone lineup on Tuesday. The company occupies a leading position in China's premium smartphone market, in part due to the decimation of Huawei Technologies' smartphone business by U.S. export controls, but has also come under scrutiny in the run-up to the iPhone 15's launch.

Shares in Apple and its suppliers were battered last week after reports that Chinese government agencies and state firms were banning staff from using the phone and Huawei launched a new smartphone with an advanced chip, seen as an effort by the Chinese firm for a comeback.

The unveiling of Apple's iPhone 15 attracted intense discussion online on Wednesday, as new models have done in the past. The new phone goes on sale online in China on Alibaba's Tmall marketplace on Sept. 15, and in-stores on Sept. 22.

Topics discussing the new launch attracted 380 million views on social media platform Weibo, with more than 800,000 discussions, including posts, comments and likes, on the iPhone 15.

Many cheered the iPhone 15 Pro's new 3 nanometer chip and Apple's pitch that console-quality games such as "Resident Evil 4 Remake", can be played on the device, appealing to China's army of mobile gamers.

But several social media users had misgivings about choosing an American brand over a domestically made rival, especially after state media applauded the roll out of Huawei's Mate 60 Pro earlier this month as a triumph by China over U.S. sanctions.

A survey by Chinese news portal Sina on the social media platform asking participants if they would buy the Mate 60 or iPhone 15 saw 61,000 votes for the Huawei device versus 24,000 for the iPhone 15.

Comparisons of how the Mate 60 Pro could make calls and send texts via satellite, while the iPhone 15 was only capable of satellite texts, also generated significant discussion.

"The iPhone 15 can only send SOS messages via satellite, using last-generation technology already deployed in Huawei's Mate 60, which supports full satellite calling," one user wrote.

China's smartphone market, like the sector globally, is in the midst of a slump and analysts cautioned that this, and the country's slowing economy, could also weigh on sales of the iPhone 15.

Apple's third-party retailers in February launched rare discounts on the iPhone 14 Pro by as much as 10% that helped sales but could undermine demand for the latest series, analysts said.

"This is not a good signal for the upcoming 15 series as some demand has been fulfilled before the launch," said Archie Zhang, a research analyst at Counterpoint. "Before Huawei's surprise launch, we projected Apple's sales in China Q3 and Q4 to be flat or slightly weaker than last year."

Will Wong, an analyst with industry research group IDC, saw recent public sector developments and Huawei posing a challenge for Apple.

"Sales (of the iPhone 15) are not going to be easy, especially since Chinese consumers are either being cautious in spending or shifted their focus to leisure or travel," he added.

China's foreign ministry said on Wednesday that Beijing had not issued a ban on the purchase and use of foreign phone brands like Apple but noted that it had noticed media coverage of security incidents related to Apple's phones.

IDC expects Apple's share in China's premium phone market will gradually decline due to increased competition from Huawei.

For the first half of 2023, Apple held 67% of market share for phones priced over $600, followed by Huawei with 15.6%.

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Apple vs Huawei: A new smartphone battle divides China

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Mixed reactions in China to Apple's iPhone 15 launch, with some praising its features while others prefer Huawei's new smartphone.

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Netizens Call Out Owner Of Sambal Nyet Khairi For Allegedly Copying Khairulaming’s Product

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“This is not the first time this has happened,” said the business owner and influencer.

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Chapter 7- Motive for International Venture

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This is how COVID-19 has affected international trade | World Economic Forum