China's recent price-setting agreements with South Korea and the EU aim to alleviate trade tensions by increasing export prices to prevent anti-dumping duties.
China is implementing price-setting agreements with various countries to mitigate trade tensions, particularly through deals involving electric vehicles (EVs) and steel exports. After a successful agreement with the European Union regarding electric vehicles, China has mirrored this strategy in a trade dispute with South Korea concerning hot-rolled steel coils. In these agreements, Chinese exporters commit to raising their export prices as a means to circumvent punitive anti-dumping duties, which could significantly affect their market viability and access to these foreign markets.
Analysts view these price-undertaking deals as a strategic compromise that benefits both exporting companies in China and their international trading partners. By ensuring that the increase in price remains with the exporters instead of being absorbed by tariffs, these agreements could facilitate smoother trade relations. According to John Gong, an economics professor, the price undertaking reflects a sensible approach in the face of mounting pressures on China as a key player in the global manufacturing and export landscapes. This tactic helps China sustain its competitive edge while navigating a complex trade environment marked by disputes and protective tariffs.
The implications of such agreements extend beyond immediate trade benefits; they underscore a broader trend in international trade where countries seek cooperative solutions to disputes rather than engaging in escalating tariff wars. As China continues to adapt its trade strategies, the success of these price agreements might set a precedent for future negotiations, reshaping how trade disputes are resolved globally and potentially easing tensions with other trading partners as well.
