Penalties: Lindner warns of trade conflict with China

Penalties: Lindner warns of trade conflict with China

A trade war with China could hit the export-oriented German economy hard. This is probably one of the reasons why people are holding back in the debate about punitive tariffs. But international pressure is increasing.

Finance Minister Christian Lindner has warned of a trade war in the debate about punitive tariffs on Chinese products. We must react to dumping and unfair practices, but we must not weaken free and fair world trade as a whole, said the FDP politician at the meeting of G7 finance ministers in northern Italy. “Because trade wars only have losers. You can’t win them.”

At the meeting on Lake Maggiore, the major western industrial nations are seeking a common response to Chinese industrial policy. Last week, the USA imposed special tariffs on imports of electric cars, semiconductors, solar cells, cranes and other products from China. The United States accuses Beijing of distorting competition through significant state subsidies. Cheap Chinese products are being deliberately directed to the USA and Europe. Before the meeting in Italy, US Treasury Secretary Janet Yellen called for a clear and united front from the USA and Europe against Chinese overcapacity.

The EU is also currently investigating the extent to which China is distorting the market for electric cars. A decision on whether to impose punitive tariffs is still pending. The Chinese Chamber of Commerce in Brussels recently warned of possible countermeasures by Beijing that could affect European and US car manufacturers. The Kiel Institute for the World Economy (IfW) warned that the US tariffs could trigger a spiral of reactions and counter-reactions that would be very disadvantageous for Germany and the EU.

Germany comes under pressure

Germany is now coming under increasing international pressure in the debate. Following the USA, France also stressed at the G7 meeting that the large democratic industrial nations must act as one. “The G7 must show a united front in order to defend their industrial interests,” said French Finance Minister Bruno Le Maire. At the same time, he also stressed that any form of trade war must be avoided. “China is our economic partner,” said Le Maire. At the same time, Chinese industry produces with high subsidies but also overcapacity. That is a problem.

Lindner stressed that it must be objectively and very carefully examined whether there is Chinese dumping. Then it must be responded to – “if it is not possible through the World Trade Organization, then through coordinated joint measures.” As a successful export nation, Germany has its own interest in free, fair and open world trade. “We are also heavily dependent on globally diversified supply chains,” stressed Lindner. But other countries must also have an interest in rules-based world trade. Additional fragmentation of the global economy can only produce losers.

Source: Stern

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