Former Treasury Secretary Warns Against Excessive Trade Restrictions On China: 'Politicians Will Go Beyond Reasonable Boundaries'

The former U.S. Treasury Secretary, Robert Rubin, has warned U.S. lawmakers about the potential risks of imposing excessive trade restrictions and tariffs on China.

What Happened: Speaking at the Bund Summit in Shanghai via video link, Rubin urged for a cautious approach to tariffs, warning against crossing reasonable boundaries, Bloomberg reported on Thursday.

“The danger is that politicians will go beyond reasonable boundaries,” Rubin said.

While acknowledging the importance of secure supply chains, Rubin questioned the extent of the restrictions. This comes after President Joe Biden’s May announcement of plans to increase tariffs on Chinese imports, including semiconductors, solar cells, and critical minerals. The new tariffs, ranging from 25% for batteries to 100% for electric vehicles, are expected to be formally approved soon.

See Also: China’s Chipmaking Investments Top US, Taiwan, South Korea Combined: What It Means For Nvidia, ASML

Why It Matters: Rubin’s cautionary remarks come at a time when many in the U.S. are concerned about China’s manufacturing investments and overcapacity affecting the global market. U.S., Canadian, and European officials have accused China of using government subsidies to create excess capacity in industries like electric vehicles, leading to an influx of cheap products in global markets and jeopardizing jobs in other countries.

Other economists at the forum, including C. Fred Bergsten, director emeritus at the Peterson Institute for International Economics, called for a “functional decoupling,” where the U.S. and China identify areas for competition and collaboration. This approach has been suggested as an alternative to the U.S.’s strategy of excluding China from the global supply chain for key products, a policy that has been criticized by economists.

The ongoing dialogue between President Biden and Chinese President Xi Jinping, following U.S. National Security Advisor Jake Sullivan‘s visit to China in August, could play a crucial role in shaping these trade policies.

Read Next: Nio Feels Buying Pressure Ahead Of Q2 Earnings

Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

Image via Shutterstock