‘Trade dispute’ between US and China could lead to changes in global energy trade

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'Trade dispute' between US and China could lead to changes in global energy trade
'Trade dispute' between US and China could lead to changes in global energy trade

Africa-Press – Lesotho. Global energy trade may alter as a result of the US increasing tariffs on China’s exports of renewable energy products in an effort to boost local production.

In recent weeks, the US administration has expressed concern about China’s domestic subsidies for clean energy production.

Following this, the US administration announced its decision to raise tariffs on $18 billion worth of imports from China.

The tariff rates are set to change for various materials and products in the coming years. For instance, the tariff on certain critical minerals will increase from 0% to 25% this year. The rate for lithium-ion EV batteries will rise from 7.5% to 25% by the end of the year, and the tariff on lithium-ion non-EV batteries will see a similar increase by 2026.

The tariff on battery parts will increase from 7.5% to 25% this year, and the tariff on solar cells is scheduled to increase from 25% to 50% this year.

Adrian Duhalt, a research fellow at Columbia University’s Center on Global Energy Policy, told Anadolu that the “trade dispute” between the two countries is likely to continue, and China may turn to new markets, leading to changes in global energy trade.

According to Duhalt, with trade barriers imposed on China for its products entering the US, and with its clear intention to exert significant influence in industries tied to the energy transition, including critical minerals, batteries, EVs and solar panels, China’s drive to enter and consolidate its presence in other markets, especially in the price-sensitive developing world, is stronger than ever.

“It seems to me that the conflict between these two countries risks increasing the cost of energy transformation for everyone,” he said, adding that if other countries follow in the footsteps of the United States, there may be a global price increase in energy trade.

He also underlined that in a scenario where other countries follow the US’ example and impose levies on China’s products, the world should not rule out an increase in commodity prices.

– Opportunity for Türkiye

Caner Zanbak, an environmental coordinator of the Turkish Miners’ Association, stated that China will be minimally affected by the tax increase due to new investments and trade with developing countries in the face of these decisions taken by the US to protect its production.

Zanbak says the situation in question will not result in greater competition, but rather countries including Japan, South Korea and the European Union (EU) may start to compete in more favorable market conditions over the next five years.

“At the moment, this rivalry seems hot, but given China’s apparent superiority in global raw material supply issues, I think it will soften in the future,” he said.

Zanbak asserts that Türkiye can turn the situation into an opportunity, particularly if Türkiye increases the production of solar panels and enters into free trade cooperation with markets like the US and EU member countries where it can easily sell to.

According to Wood Mackenzie’s new Looking Overseas report, Chinese renewable product exports grew 35% from 2019 to 2023, driven by competitive prices and production capacity domination.

Chinese renewable energy companies are actively looking for global business opportunities, according to the report. Renewable energy investors tend to invest in markets with high power demand, stable business environments and predictable revenue streams. Meanwhile, Chinese manufacturers are targeting markets with local content requirements to become regional manufacturing hubs.

Integrated supply chains, rapidly declining prices, and a high standard of performance have enabled China-based renewable manufacturers to supply more than 65% of the total global demand, and Wood Mackenzie expects this trend to continue.

Source: Anadolu Ajansı

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