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OPINION:
Amid tariffs and the anticipation of dramatic shifts in trading between the U.S. and China, it is important to appreciate the role of energy in strategic competition. Energy is fundamental to China’s manufacturing prowess and overcapacity.
Debate among analysts and pundits about tariffs is rife, but the fact that the U.S. receives cheap products from China is not debatable. The rest of the world worries that if the U.S. does not take all these products, from solar panels to dolls, then it will receive them.
If foreign nations are concerned about an increase in cheap Chinese products entering their markets and negatively impacting their economies and competition, then the United States also should be. More than 70% of the products shipped by Amazon come from China. The United States has accepted these cheap products for decades, decimating competition and making the U.S. beholden to an adversary.
Some analysts say these tariffs are about bringing manufacturing jobs back to the U.S., a bygone fantasy.
Tariffs are not about bringing old manufacturing jobs back to the United States. Our dramatic shift in trade policy with China, in conjunction with this administration’s full-throated energy policies, will reduce cheap products from overwhelming our markets, stem the decline of the U.S. industrial base and encourage the U.S. to build and manufacture.
Unlike Europe, the U.S. no longer allows China to hollow out its industrial base. Countries such as Germany allowed China to undercut competition in manufacturing, especially in the auto industry. They also endorsed aggressive green policies, importing incredible quantities of solar panels from China and dramatically escalating the cost of electricity for consumers and businesses. Rising energy costs in Europe have directly contributed to more expensive manufacturing costs and the inability to compete.
The Trump administration is stopping the aggressive green energy policies of the Biden administration. These policies escalated electricity prices and production costs, destroying the consumer and competitive edge for U.S. businesses and manufacturing.
U.S. tariffs on China should be about rebalancing the whole relationship with China, not just our trade relationship. Those who have read the executive orders released by the Trump administration about tariffs and energy may have noticed that nearly all speak to “economic and national security” and the need for “a resilient manufacturing and defense industrial base.”
The question not being asked is why these Chinese products are so cheap in the first place. Many China analysts and scholars discuss China’s manufacturing prowess, production capacity and scale but fail to mention the energy that underpins all that production, predominantly coal-fired power generation. China hosts one-third of the world’s power generation, and it can build not just wind turbines, batteries, plastic toys and T-shirts but also vehicles, ships, weapons and ammunition.
For China, however, energy is an afterthought. The country’s investment in coal allows it to use cheap and reliable baseload power and further subsidize this abundant and reliable energy source, offering an incredible edge in competition in biotechnology and cars. This makes it easy for China to compete, especially when Chinese companies are not beholden to the same rules of competition as Western firms, namely profitability.
When China revived dead and mothballed electric vehicle manufacturers in 2024 as part of its “new productive forces,” it didn’t do so because it lacked enough EVs for its market and the global market. Instead, it did it because it wanted to dump these products, undercut prices and decimate competition, including competition with U.S. auto manufacturing, a cornerstone of the U.S. defense and industrial base that helped win World War II.
The U.S. is the world’s largest oil and gas producer and has more coal than any other nation. There is no excuse for America not to have redundant, reliable and affordable power generation to give its consumers, businesses and manufacturing a competitive edge. The changes to our energy policies and our policy with China are not about bringing jobs back to the U.S.; they are about enabling the U.S. to compete and win.
• Trisha Curtis is a macroeconomist with expertise in U.S. shale markets, geopolitics and China. She is CEO of PetroNerds, host of the “PetroNerds” podcast and an economist for the American Energy Institute.
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