Taking action: Biden exits the White House before boarding Marine One in Washington. The US president ratchets up rates on goods the country struggled to import during the pandemic and for key industries like chips and green energy. — Bloomberg
WASHINGTON: President Joe Biden is hiking tariffs on a wide range of Chinese imports, including semiconductors, batteries, solar cells and critical minerals, in an election-year bid to bolster domestic manufacturing in critical industries.
The United States will also raise levies on port cranes and medical products, in addition to previously reported increases on steel, aluminium and electric vehicles (EVs).
The changes are projected to affect around US$18bil in current annual imports, the White House said.
The moves represent Biden’s most comprehensive update to the China tariffs first imposed by his predecessor, former President Donald Trump, and a recognition that a hawkish approach to trade with Beijing remains popular with US voters.
None of Trump’s tariffs will be reduced. Biden will ratchet up rates on goods the United States struggled to import during the coronavirus pandemic, and for key industries like chips and green energy, that he’s sought to bolster since he took office.
Still, Biden must strike a careful balance. Additional tariffs risk increasing prices for consumers already hurting from inflation, and inspiring the ire of China, which could choose to retaliate in kind.
The changes are staggered to take effect from 2024 to 2026, and are more targeted than the 60% flat tariff Trump has proposed.
The biggest jump is for EVs, with the tariff rate quadrupling, while other imports are seeing levies doubled or being imposed for the first time.
Biden will formally announced the measures, detailed in a statement, at a White House Rose Garden event yesterday.
Officials, who described the plan on condition of anonymity before the official announcement, said they are pairing domestic investments from the bipartisan infrastructure act and the Chips and Science Act with new tariffs to level the playing field with China.
In some cases, the levies apply to areas where China has only a small segment of the US market, but are intended to head off a potential deluge of imports.
“China is simply too big to play by its own rules,” National Economic Council director Lael Brainard told reporters.
“China’s using the same playbook it has before to power its own growth at the expense of others by continuing to invest, despite excess Chinese capacity, and flooding global markets with exports that are underpriced due to unfair economic practices.”
The tariff rate on semiconductors will double from 25% to 50% by 2025, targeting an industry Biden has made a centrepiece of his manufacturing agenda through billions in subsidies to bolster US production.
The levies aim to counter China’s rush into so-called legacy chips, which are older-generation components that are still essential to the global economy.
The Biden administration recently concluded a survey of more than 100 auto, aerospace, defence and other companies about their supply chains for those less-advanced semiconductors, and the European Union is considering launching a similar review of its own.
Certain critical minerals will see a new 25% tariff this year, while natural graphite and permanent magnets will be hit with that rate in 2026. Ship-to-shore cranes will also face a new 25% tariff this year.
The EV tariff will take effect this year, with a final tariff rate of 102.5%, up from 27.5% now. And tariffs on certain steel and aluminium from China, currently facing a 0% or 7.5% tariff, will rise to 25% this year.
Tariffs on lithium-ion batteries for EVs, as well as battery parts, will jump to 25% from 7.5% this year, while non-EV lithium-ion batteries make the same jump in 2026.
Solar-cell tariffs will rise from 25% to 50% this year.
The United States will also impose a new 50% tariff on Chinese syringes and needles this year, while tariffs on personal protective equipment, such as respirators and face masks, rise to 25% from either 0% or 7.5% now.
Tariffs on rubber medical and surgical gloves will jump to 25% from 7.5% in 2026.
It’s unclear whether the moves will trigger retaliatory tariffs by China, but the tariff regime proposed under Trump already applies to about US$226bil worth of goods, according to an estimate provided by the administration, based on 2023 data.
“Hopefully we will not see a significant Chinese response, but that’s always a possibility,” Treasury Secretary Janet Yellen said in an interview with Bloomberg Television on Monday.
She said in a statement that “President Biden and I have seen firsthand the impacts of surges of certain artificially cheap Chinese imports on American communities in the past, and we will not tolerate that again.”
“These problems built up over time and will not be solved in a day,” Yellen added.
Yesterday’s announcement is the culmination of a mandatory review of Trump’s tariffs that stretched for more than a year and under the shadow cast by the upcoming election.
Both candidates have sought to portray themselves as tough on Beijing with Trump pledging across-the-board tariffs on China if elected.
Biden has touted a domestic manufacturing boom he said is keeping US jobs at home and his allies have criticised Trump’s tariff proposal, and said it would only worsen already high inflation that has been a persistent liability.
Biden’s tariff changes do not include any offsetting reductions.
One of the officials said the United States had not seen improvements in many unfair Chinese trade practices, such as forced technology transfers, since the tariffs were first imposed, making any reductions unwarranted.
Brainard referred to the domestic calculations at play.
“China’s unfair practices have harmed communities in Michigan, in Pennsylvania and around the country that are now having the opportunity to come back,” she told reporters, referencing two swing states crucial to the 2024 outcome. — Bloomberg
