Apr 3, 2024 - Business

Yellen "won't rule out" measures to blunt economic aggression from China

Photo of Janet Yellen

Photo: Kevin Dietsch/Getty Images

Treasury Secretary Janet Yellen said on Wednesday that the U.S. would consider a range of actions to help protect industries threatened by China — including the possibility of trade barriers like tariffs.

Why it matters: It's the strongest signal yet that the Biden administration is willing to take dramatic steps to blunt the economic effect of what officials see as subsidized over-production in China — even if it risks further inflaming tensions between the world's two largest economies.

Yellen issued the warning to reporters during an Anchorage, Alaska stopover on the way to China, where she will meet with her Chinese government counterparts.

  • There's growing economic tension between the two nations, with the Biden administration accusing China of flooding the global market with cheap goods — driving down demand for competing products from other parts of the world.

What they're saying: "We are trying to nurture an industry in, for example, solar cells, electric batteries, electric vehicles," Yellen said.

  • "I wouldn't want to rule out other possible ways in which we would protect them," Yellen added.

Context: Yellen said the Chinese government has unleashed "massive investment" in some of these same industries, where production is surging without adequate demand.

  • The White House has warned that the subsidies have resulted in huge capacity of products like solar panels and electric vehicles that China can export at cheap prices.
  • "We're concerned the spillover of Chinese subsidies to these industries are happening in the United States and other countries as well," Yellen said.
  • "I think it's not just the United States, but quite a few countries — including Mexico, Europe and Japan — that are feeling pressure from massive investment in these industries in China."

The big picture: Yellen's trip comes right after President Biden and China's Xi Jinping spoke this week in a phone call.

  • Yellen told reporters on Wednesday that Biden charged her with "attempting to stabilize our economic relationship with China."
  • Yellen, whose trip is the second in less than a year, said her conversations with top officials in China signal that neither country wants to "decouple" their economies.
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