Joe Biden slaps Chinese electric cars, computer chips with higher US tariffs; Beijing vows retaliation

China immediately vowed retaliation. Its commerce ministry said Beijing was opposed to the U.S. tariff hikes and would take measures to defend its interests.

Biden will keep tariffs put in place by his Republican predecessor Donald Trump while ratcheting up others, including a quadrupling of EV duties to over 100% and doubling the duties on semiconductor tariffs to 50%, the White House said in a statement.

The new measures affect $18 billion in imported Chinese goods including steel and aluminum, semiconductors, electric vehicles, critical minerals, solar cells and cranes, the White House said.

The United States imported $427 billion in goods from China in 2023 and exported $148 billion to the world’s No. 2 economy, according to the U.S. Census Bureau, a trade gap that has persisted for decades and become an ever more sensitive subject in Washington.

“It’s very clear that China has continued to engage in unfair practices, like forced technology transfer, intellectual property theft, unfair subsidies,” Biden economic adviser Lael Brainard told Reuters.

“The president is taking action that is tough, but it’s also strategic. It’s focused on a few key sectors where China has built enormous over-capacity.”

U.S. Trade Representative Katherine Tai said the revised tariffs were justified because China was stealing U.S. intellectual property. But Tai recommended tariff exclusions for hundreds of industrial machinery import categories from China, including 19 for solar product manufacturing equipment.

FREE TRADE NO MORE

Even as Biden’s steps fell in line with Trump’s premise that tougher trade measures are warranted, the Democrat took aim at his opponent in November’s election.

The White House said Trump’s 2020 trade deal with China did not increase American exports or jobs, and it said the 10% across-the-board tariffs on goods from all points of origin that Trump has proposed would frustrate U.S. allies and raise prices. Trump has floated tariffs of 60% or higher on all Chinese goods.

“Not smart, not targeted and very costly to American consumers,” said Brainard.

Administration officials said their measures are combined with domestic investment in key industries and unlikely to worsen a bout of inflation that has already angered U.S. voters and imperiled Biden’s reelection bid.

Biden has struggled to convince voters of the efficacy of his economic policies despite a backdrop of low unemployment and above-trend economic growth. A Reuters/Ipsos poll last month showed Trump had a 7 percentage-point edge over Biden on the economy.

Trump said on Tuesday the Biden administration’s new tariffs should be applied to other types of vehicles and products “because China’s eating our lunch right now.”

Analysts have warned that a trade tiff could raise costs for EVs overall, hurting Biden’s climate goals and his aim to create manufacturing jobs.

Biden has said he wants to win this era of competition with China but not to launch a trade war. He has worked in recent months to ease tensions in one-on-one talks with Chinese President Xi Jinping.

Both 2024 U.S. presidential candidates have departed from the free-trade consensus that once reigned in Washington, a period capped by China’s joining the World Trade Organization in 2001. Trump’s broader imposition of tariffs during his 2017-2021 presidency kicked off a tariff war with China.

As part of the long-awaited tariff update, Biden will increase tariffs this year under Section 301 of the Trade Act of 1974 from 25% to 100% on EVs, bringing total duties to 102.5%, from 7.5% to 25% on lithium-ion EV batteries and other battery parts and from 25% to 50% on photovoltaic cells used to make solar panels. Some critical minerals will have their tariffs raised from nothing to 25%.

The tariffs on ship-to-shore cranes will rise to 25% from zero, those on syringes and needles will rise to 50% from nothing now and some personal protective equipment (PPE) used in medical facilities will rise to 25% from as little as 0% now. Shortages in PPE made largely in China hampered the United States’ COVID-19 response.

More tariffs will follow in 2025 and 2026 on semiconductors, as well as lithium-ion batteries that are not used in electric vehicles, graphite and permanent magnets as well as rubber medical and surgical gloves.

A step Biden previously announced to raise tariffs on some steel and aluminum products will take effect this year, the White House said.

A number of lawmakers have called for massive hikes on Chinese vehicle tariffs or an outright ban over data privacy concerns. There are relatively few Chinese-made light-duty vehicles being imported now.

The United Auto Workers, a politically important union that endorsed Biden, said the tariff moves would ensure that “the transition to electric vehicles is a just transition.”