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US President Joe Biden is ramping up tariffs on Chinese-made electric cars, solar panels, steel, and other goods. The White House said the measures, which include a 100% border tax on electric cars from China, were a response to unfair policies and intended to protect US jobs.
China has expressed opposition to these hikes and has vowed to take retaliatory measures. Analysts believe the tariffs are largely symbolic and are meant to garner support during a challenging election year. These actions come after months of criticism from former President Donald Trump, who is running against Biden and has argued that Biden’s support for electric cars would “kill” the US car industry.
Biden emphasized that he would not allow China to “unfairly control the market” for electric vehicles and other critical goods, including batteries, computer chips, and basic medical supplies. He stressed the importance of a secure domestic supply chain, a lesson underscored by the pandemic.
The new tariffs, announced on Tuesday, are expected to impact $18 billion worth of imports, according to the White House. Electric vehicle tariffs will rise from 25% to 100%, while levies on solar cells will increase from 25% to 50%. Tariff rates on specific steel and aluminum products will more than triple to 25%, up from 7.5% or less.
In response, China’s commerce ministry stated that the new measures would “severely affect the atmosphere for bilateral cooperation” and criticized the politicization of economic issues. A spokesperson for China’s foreign ministry warned that Beijing would “take all necessary measures to safeguard its legitimate rights and interests”.
The new tariffs expand the extensive border taxes imposed on Chinese goods during the Trump administration, which cited unfair trade practices. During the Biden administration’s review of these measures, nearly 1,500 comments were received, predominantly from business owners arguing that the tariffs were driving up prices for Americans and should be removed.
Biden’s decision to maintain and expand these tariffs, despite the persistent US inflation impacting his approval ratings, reflects a significant shift in trade views for both political parties in the US, which have traditionally supported the benefits of global commerce.
Wendy Cutler, a former US trade official and now vice-president of the Asia Society Policy Institute, suggested that Americans are willing to accept higher car prices to protect US companies and jobs. “We’ve seen this movie before – with solar, steel, and aluminum, and when it comes to cars and other products, the United States needs to get ahead of the curve,” she said.
In a briefing with reporters, White House officials denied that domestic politics influenced the decision. They emphasized that Beijing had not moved away from practices harming the US, such as rules forcing western companies to share information to steal it and subsidies enabling firms to produce beyond expected demand.
Biden said, “They’re flooding the market. It’s not competing – it’s cheating.” The White House claims the tariffs are targeted and unlikely to stoke inflation, contrasting their approach with Trump’s broader tariff policies.
Erica York, a senior economist at the Tax Foundation, remarked that both Biden and Trump are pursuing higher trade barriers, focusing inward rather than implementing policies to enhance competitiveness. She described the tariffs as a “euphemism for protection for sectors politically important for this administration”.
While the US already imposes steep tariffs on Chinese-made electric vehicles, making sales negligible, Washington is wary of increasing sales by Chinese companies in Europe and other countries. Ensuring green technologies are not dominated by a single country is critical to a successful and sustainable transition, White House officials noted.
Investors and Chinese companies are closely watching for similar actions from Europe, particularly as the EU and UK consider curbing imports of Chinese-made electric cars, despite potential risks to adoption rates. Natasha Ebtehadj of Artemis Investment Management noted that the relatively small volume of imports to the US makes Europe’s response more significant.
The US and China have been in a trade war since 2018, when Trump imposed tariffs on two-thirds of goods imported from China, then worth an estimated $360 billion. This stand-off led to a détente in early 2020, with some tariffs reduced and China pledging to boost US purchases. However, these promises have fallen short, with the tariffs yielding over $200 billion in new border taxes for the US government, while significantly reshaping global trade patterns.
Oxford Economics, in a research note, described the latest plans as “more symbolic bark than bite,” predicting they would slightly increase inflation and marginally impact growth.
For more details, visit BBC News.