Before new tariffs on specific industries are expected this week, US Treasury Secretary Janet Yellen warned on Monday that the United States might expect a major reaction from China in the wake of any tariff steps taken by the government.
Speaking to reporters, Yellen said that she and other American officials had informed China that they might adjust the tariffs that were initially put in place under the presidency of Donald Trump to be more strategically focused, but that any adjustments would be limited.
She said that the Biden administration will make sure Chinese officials are notified in advance of any US action, but she did not provide any details about the anticipated changes to the US tariffs on China.
She added that anything they do, in President Biden's opinion, should be focused on their issues rather than being broadly applied, and ideally, China won't react significantly. However, she also said earlier on Monday on Bloomberg Television that there's always a possibility.
Yellen made comments before a broadband event on Tuesday, the same day that US President Joe Biden is scheduled to unveil new tariffs, which would include a significant increase in taxes on electric car purchases.
According to people who know the situation, semiconductors, medical supplies, and solar equipment would also be targeted.
She noted that she has been very clear in her engagement with the Chinese about their belief that there should be equal opportunities for competition and their particular concern regarding semiconductors, clean energy, and fields where China has, by means of its policies, encouraged investment to the point that it has led to overcapacity.
Yellen stated that she hoped Beijing would acknowledge that US actions were targeted, but she refrained from speculating on potential Beijing retaliation.
According to Yellen, China was seeking a deliberate industrial policy that focused on investments in advanced manufacturing, which were creating global overcapabilities and perhaps eliminating competition from US companies.
She mentioned that because of issues in the real estate market, all Chinese investment directed into the real estate sector before was now going toward technological manufacturing.
She emphasized how important it is for the United States to maintain commerce with China and to stabilize ties so that any disagreements can be worked out.
When Bloomberg asked Yellen if she thought that the US and China should go to war over trade, she replied that they are working to stabilize the economic relationship, and while they do not want to cut off economic ties with China, they do believe that there should be fair competition.