Joe Biden raises tariffs on Chinese chips, critical minerals and electric vehicles

These measures represent the US president’s most comprehensive update to the policies first imposed by his predecessor

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US President Joe Biden is raising tariffs on a wide range of Chinese imports – including semiconductors, batteries, solar cells and crucial minerals – in an election-year effort to boost domestic production in crucial industries.

The US will also increase duties on port cranes and medical products, in addition to previously reported increases on steel, aluminum and electric vehicles. The changes are expected to affect about $18 billion in current annual imports, the White House said.

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“Today we are serving our legislative purpose to stop the harmful acts, policies and practices associated with technology transfer in the People’s Republic of China, including cyber intrusions and cyber theft,” U.S. Trade Representative Katherine Tai said in a statement.

The measures represent Biden’s most comprehensive update to the China tariffs first imposed by his predecessor, former President Donald Trump, and an acknowledgment that an aggressive approach to trade with Beijing remains popular with American voters. None of Trump’s tariffs will be reduced. Biden will raise tariffs on goods that the US has struggled to import during the coronavirus pandemic, and on key industries – such as chips and green energy – that he has been trying to strengthen since taking office.

Still, Biden must strike a careful balance. Additional tariffs threaten to raise prices for consumers already burdened by inflation and anger China, which could choose to retaliate in kind.

China “resolutely” opposes the US president’s decision to raise tariffs on Chinese imports and views the move as “political manipulation”, according to Beijing’s Commerce Ministry, which urged the Biden administration to reduce the to repeal duties and correct what she called “wrongdoing.” .”

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The changes will take effect on a staggered basis from 2024 to 2026, and are more targeted than the flat 60 percent rate Trump has proposed. The biggest jump has been on electric cars, with the tariff quadrupling, while on other imports duties are being doubled or imposed for the first time.

Biden will formally announce the measures, detailed in a statement, at a Rose Garden event at the White House on Tuesday. Officials, who described the plan on condition of anonymity before the official announcement, said they are pairing domestic investments from the bipartisan infrastructure bill and the Chips and Science Act with new tariffs to level the playing field with China.

In some cases, the tariffs apply to areas where China controls only a small segment of the U.S. market, but are intended to stem a potential flood of imports.

“China is simply too big to play by its own rules,” Lael Brainard, director of the National Economic Council, told reporters. “China is using the same playbook as before to fuel its own growth at the expense of others, by continuing to invest despite excess Chinese capacity, and by flooding global markets with underpriced exports due to unfair economic practices.”

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Targeted industries

The tariff on semiconductors will double from 25 percent to 50 percent by 2025, targeting an industry that Biden has made a centerpiece of his manufacturing agenda through billions in subsidies to boost U.S. manufacturing.

The duties are aimed at countering China’s rush to so-called legacy chips, which are older-generation components that are still essential to the global economy. The Biden administration recently completed a survey of more than a hundred automotive, aerospace, defense and other companies on their supply chains for the less advanced semiconductors, and the EU is considering launching a similar survey of its own.

A new rate of 25 percent will apply to certain crucial minerals this year, while natural graphite and permanent magnets will be subject to that rate in 2026. Ship-to-land cranes will also face a new rate of 25 percent this year.

The tariff for electric vehicles will come into effect this year, with a final rate of 102.5 percent, compared to 27.5 percent now. And tariffs on certain steel and aluminum from China – currently facing a tariff of 0 percent or 7.5 percent – ​​will rise to 25 percent this year.

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Tariffs for lithium-ion batteries for electric vehicles, as well as battery components, will rise from 7.5 percent this year to 25 percent, while non-EV lithium-ion batteries will make the same jump in 2026. Tariffs for solar cells will increase this year from 25 to 50 percent.

The US will also impose a new 50 percent tariff on Chinese syringes and needles this year, while tariffs on personal protective equipment such as respirators and face masks will rise to 25 percent from 0 percent to 7.5 percent now. Rates for rubber medical and surgical gloves will increase from 7.5 percent in 2026 to 25 percent.

It is unclear whether these measures will lead to retaliatory tariffs from China, but the tariff regime proposed under Trump already applies to about $226 billion of goods, according to an administration estimate based on 2023 data.

“Hopefully we won’t see a significant Chinese response — but that’s always a possibility,” Treasury Secretary Janet Yellen said Monday in an interview with Bloomberg Television.

She said in a statement that “President Biden and I have seen firsthand in the past the impact of the surge of certain artificially cheap Chinese imports on American communities, and we will not tolerate that again.”

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“These issues have accumulated over time and will not be resolved overnight,” Yellen added.

Long review

Tuesday’s announcement is the culmination of a mandatory review of Trump’s tariffs that lasted more than a year and was overshadowed by the upcoming election. Both candidates have tried to portray themselves as tough on Beijing, with Trump promising blanket tariffs on China if elected.

Biden has touted a boom in domestic manufacturing that he says will keep American jobs at home, and his allies have criticized Trump’s tariff proposal, saying it would only worsen already high inflation, which is a persistent problem.

Biden’s tariff changes do not include compensating reductions. One of the officials said the U.S. has seen no improvements in many unfair Chinese trade practices, such as forced technology transfers, since the tariffs were first imposed, making reductions unwarranted.

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Brainard referred to the domestic calculations at play.

“China’s unfair practices have harmed communities in Michigan, Pennsylvania and across the country, which now have a chance to bounce back,” she told reporters, referring to two swing states crucial to the 2024 outcome.

With assistance from Annmarie Hordern and Gregory Korte.

Bloomberg.com

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