Indian exporters fear dumping from China after fresh US-China tariff war

Notably, China accounts for over half of the global EV sales, largely driven by its near dominance in battery production – a critical element for EV manufacturing. In 2023, China’s production of lithium-ion batteries was equivalent to the global demand that stood at 2,600 GWh.

Chinese battery giant China’s Contemporary Amperex Technology Co Limited (CATL) plays the most crucial role in China’s hold over global battery production and the company alone accounts for two-thirds of the global battery production. CATL is a supplier to major automakers such as Tesla, Volkswagen AG and Toyota Motor Corp.

Indian exporters said that the recent US move will start a tariff war between two major economic powers as a retaliation is soon expected from China. However, the US-China tariff war could also open up opportunities for the Indian players.

“This [tariff war] provides an opportunity for India and other competitors to chip in the supply gap. Of the products affected by additional duties on China, India has opportunities in facemasks, Personal Protective Equipment Kit (PPE), syringes & needles, medical gloves, aluminium and iron & steel. Opportunity may come in China also with retaliation on US exports, provided we have market access in products targeted by China,” Kumar said.

Notably, only $18 billion out of $420 billion exports of China to the US is affected by the recent tariff hikes which is little over 4 per cent. But a threat of dumping also comes as the European Union is expected to announce similar barriers citing possible injury from Chinese imports.

The European Commission (EC) in October last year launched an anti-subsidy investigation into the imports of battery electric vehicles (BEV) from China. As per the EC, the investigation will first determine whether BEV value chains in China benefit from illegal subsidisation and whether this subsidisation causes or threatens to cause economic injury to EV manufacturers in the EU.

“Based on the investigation’s findings, the Commission will establish whether it is in the EU’s interest to remedy the effects of the unfair trade practices found by imposing anti-subsidy duties on imports of battery electric vehicles from China,” the EC said.

The US on Tuesday said that it will increase tariffs from 25 per cent to 100 per cent on EVs, bringing total duties to 102.5 per cent, from 7.5 per cent to 25 per cent on lithium-ion EV batteries and other battery parts and from 25 per cent to 50 per cent on photovoltaic cells used to make solar panels. Some critical minerals will have their tariffs raised from nothing to 25 per cent.

The tariffs imposed by the US on ship-to-shore cranes will rise to 25 per cent from zero, those on syringes and needles will rise to 50 per cent from nothing now and some personal protective equipment (PPE) used in medical facilities will rise to 25 per cent from as little as 0 per cent now.

More tariffs will follow in 2025 and 2026 on semiconductors, as well as lithium-ion batteries that are not used in electric vehicles, graphite and permanent magnets as well as rubber medical and surgical gloves. The US cited “unacceptable risks” to US economic security posed by what it considers unfair Chinese practices that are flooding global markets with cheap goods.