The US is raising tariffs on US$18 billion worth of imports from China, targeting strategic sectors such as electric vehicles (EVs), batteries, steel and critical minerals, the White House said yesterday.
The decision comes as US President Joe Biden gears up for a rerun of his 2020 contest with Republican rival former US president Donald Trump in November’s election, with officials criticizing Trump’s record on trade as they made the announcement.
The tariff rate for EVs would quadruple to 100 percent this year, while the rate for semiconductors would surge from 25 percent to 50 percent by next year, the White House said.
Photo: AP
The action is aimed at encouraging China to “eliminate its unfair trade practices regarding technology transfer, intellectual property, and innovation,” it added in a statement.
This follows a review of tariffs imposed during a trade dispute between Washington and Beijing, during which Trump introduced levies on about US$300 billion in goods from China.
The so-called Section 301 investigation was the primary tool the Trump administration used to justify tariffs, and the US trade representative is required to look into the impact of the levies after four years.
Yesterday’s actions were also taken under Section 301 of the Trade Act.
Beyond EVs and semiconductors, Washington is roughly tripling tariffs on some steel and aluminum products, and on lithium-ion EV batteries and battery parts.
The tariff rate on natural graphite and some other critical minerals would surge from zero to 25 percent, and the rate on solar cells would double from 25 percent to 50 percent.
However, some tariff hikes, such as on non-EV lithium-ion batteries, would take effect later to allow for a transitional period as the US builds up its domestic battery production, a senior US official said, speaking on condition of anonymity.
Asked about reports of the new measures, the Chinese Ministry of Foreign Affairs said it “opposes unilateral tariff hikes in violation of WTO rules.”
China “will take all necessary measures to safeguard its legitimate rights and interests,” ministry spokesperson Wang Wenbin (汪文斌) said yesterday.
The latest moves affect products already targeted by Trump tariffs and additional ones.
A US Trade Representative (USTR) spokesperson confirmed there were no tariff reductions.
The levies would ensure that investments in jobs, spurred by Biden’s policies, are not undercut by “underpriced exports from China,” White House National Economic Council Director Lael Brainard said.
The Biden administration has pumped massive funding into areas like semiconductor manufacturing and research, alongside efforts to boost green investments.
But Brainard accused Beijing of powering its growth "at the expense of others."
“As a result of unfair practices, China’s anticipated manufacturing capacity in solar is more than double the forecasts of near-term global demand,” she said.
Brainard also took aim at the Trump administration, saying that it “failed to follow through” with investments, and to ensure China complied with a deal marking a truce in the trade dispute.
The so-called Phase One agreement “did not deliver on its promises to increase exports to China from the US, to create manufacturing jobs here in America, or to end China’s unfair practices,” she said.
Hiking tariffs on Chinese EVs would be “a pre-emptive strike” given that few such vehicles are imported, Albright Stonebridge Group partner for China Paul Triolo said.
The effect from EV tariffs alone is expected to be minimal.
“It is really a signal to US automakers that the Biden administration is protecting the industry from Chinese EVs,” Triolo said.
However, tariffs covering EV batteries and supply chains would be “a much bigger issue, because of the dominance of Chinese companies in the finished battery space and for critical minerals across the battery supply space,” he said.
Beijing is likely to retaliate with tariff increases of its own, Triolo said, adding that he does not expect US levies alone to upset current stability in US-China ties.
US Secretary of the Treasury Janet Yellen said in a statement that issues like overcapacity "will not be solved in a day," and that she would continue to directly address concerns with Chinese counterparts.
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