Chinese Commerce Minister Wang Wentao and his US counterpart are expected to hold a call soon to discuss trade and economic relations, according to a report by China’s state-run Xinhua and Reuters on their reports on Tuesday (1 Oct). Citing individuals familiar with the matter, the report mentioned that the call will focus on key issues of mutual concern, including restrictions on electric vehicles (EVs).

During a working group meeting in Beijing last month with a US delegation, Chinese officials voiced “grave” concerns over additional US tariffs, investment restrictions, and Russia-related sanctions. The two-day meeting underscored ongoing tensions between the two countries.

A new round of US tariffs, targeting US$18 billion worth of Chinese goods, including EVs, EV batteries, and solar panels, took effect in late September. Lithium-ion batteries, in particular, have been heavily impacted by the tariffs in terms of value. Despite these tariffs, the US imports nearly zero Chinese EVs.

The tariffs follow a review by the Office of the US Trade Representative of levies that were initially imposed during the presidency of Donald Trump. The Biden administration has justified the tariffs, stating that they are intended to protect strategic domestic industries from China’s state-driven overproduction. China has vowed retaliation in response.

Malaysia stands to be affected by the ongoing US-China trade tensions, as noted in a recent paper by Andrew Jia-Yi Kam titled Navigating the U.S.–China Decoupling: Malaysia’s Response to the U.S.–China Trade War in Asian Economic Papers. The paper highlights that while Malaysia’s neutral stance has so far limited the negative impacts of the trade war, the country is positioning itself to benefit from shifting trade patterns. Malaysia has been promoting local industries that are substitutable for US and Chinese goods, improving both physical and digital infrastructure, and supporting small and medium-sized enterprises (SMEs) to enhance their export capabilities.

Additionally, Malaysia is working to attract foreign direct investment (FDI) from firms relocating out of China or the United States. However, the paper warns that the country may face challenges in capitalising fully on the trade war due to declining human capital, which could hinder its ability to seize opportunities emerging from deglobalisation pressures (Kam, 2024) .

China also faces potential new tariffs from the European Union, which is expected to vote in October on imposing additional levies on Chinese EVs.

Source: Business Today