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Michael Roberts wrote a piece a week ago where he talks about all the business with US tariffs on Chinese products. I think we're all familiar with the basic premise: the US is doing protectionist trade policies in the face of Chinese production of electric vehicles and renewable energy and such.

Article TLDR:

Chinese EV imports are only 2% of the US market and the new tariffs, in total, constitute only about 7% of US-China trade; so the US is still evidently unable to cut their reliance on China. The reason why the US cannot cut their reliance is that Chinese dominance in this territory is not just skin deep. China is dominant in EV production, and the battery manufacturing for those EVs, and the manufacture of cathodes and anodes for those batteries, and the refining of the chemicals that go into the batteries.

China produces 80% of the world's solar photovoltaic modules, 60% of wind turbines, 60% of electric vehicles and batteries. In 2023 alone, China's solar power capacity grew more than the entire installed capacity in the US.

Chinese firms have rerouted supply chains to the US via Morocco, Mexico, and South Korea, which have free trade agreements with the US. Most solar cells come to the US via various South-east Asian countries. In response, the US government has mandated that US automakers won't receive tax credits if any company in their battery supply chain has 25% of its equity, voting rights, or board seats owned by a Chinese government-linked company. Nonetheless, American firms like Ford and Tesla have partnered with China's CATL to make batteries, in a way that makes them compliant with that law. I mean, they kind of have to, given China's dominance in that sector. For what it's worth, Trump has expressed support for China building factories in America so long as they employ American workers.

Here's the thing: this general strategy has been tried before. US protectionist measures against Chinese solar panels resulted in an 86% drop over the 2012-2020 period, and the US solar industry received billions in subsidies from Obama and Biden, but not only has it not revitalized the industry, the market share of the global solar industry has plummeted from 9% in 2010 to 2% in 2024. China has risen from 59% to 78% over the same period.

Part of the reason is that China does subsidies much better than the US. Chinese businesses on average receive subsidies equivalent to 3.7% of their revenues, compared to 0.4% in the OECD (more or less, the imperial core). And subsidies in China are usually low-cost loans, while in the OECD it is tax concessions. Therefore, the Chinese government can maintain control while in the West, tax concessions just let the private sector fuck off with the money. Additionally, Chinese state aid focuses on boosting manufacturing and export sectors, not protecting weak sectors. The US does the opposite, which even the IMF admits is not a strategy for good long-term growth.

The US accusing China of "non-market practices" given this context is obviously hilarious; so is the US pretending to discover that overcapacity resulting in mass exports is a thing that exists but only China is doing it.

Obviously this will all have a big climate impact; reducing access to renewables isn't going to make renewables easier to build in the US. But even in an economics sense, because China is so dominant in so many industries, the protectionism just means that input costs will rise, not that new American industries will come along and replace Chinese imports. This reduces profitability, and obviously corporations will refuse to take that hit, so they'll raise prices for the working class.