US set to hit China EVs and strategic sectors with tariffs

US President Joe Biden’s administration plans to impose major new tariffs on electric vehicles (EVs), semiconductors, solar equipment and medical supplies imported from China, a US official and another person familiar with the plan said.

Tariffs on EVs, in particular, could quadruple — from the existing 25 percent to 100 percent.

The plan was described by the people on condition of anonymity, because they were not authorized to provide details ahead of a formal announcement.

An additional 2.5 percent duty would apply to all automobiles imported into the US, the Wall Street Journal reported.

The tariffs, expected to be announced on Tuesday, come as officials across the Democratic administration have expressed frustration over China’s manufacturing “overcapacity” of EVs and other products that they say pose a threat to US jobs and national security.

The decision is the culmination of a review of Section 301 tariffs first put into place under former US president Donald Trump starting in 2018. Other existing China levies are expected to largely be maintained.

While a decision could be delayed, it nonetheless represents one of Biden’s biggest moves in the economic race with China.

The yuan weakened on the news, while the CSI 300 Index of Chinese shares fell as much as 0.6 percent in early trading before rallying.

The full scope of the incoming tariffs — including rates and the total list of sectors that would be affected — is not clear and the White House declined to comment.

The Chinese Ministry of Foreign Affairs said the tariffs imposed by the previous US administration “seriously disrupted” economic and trade exchanges between the two countries.

It called on Washington to cancel the restrictions, saying that China would take steps to defend its rights and interests.

“Instead of correcting its wrong practices, the United States continued to politicize economic and trade issues,” ministry spokesman Lin Jian (林劍) told a regular briefing on Friday. “To further increase tariffs is to add insult to injury.”

Industrialized nations including the US and its European allies fear a wave of low-priced Chinese exports could overwhelm domestic manufacturing.

In the US, there is particular concern that China’s green energy products would undermine massive climate-friendly investments made through the Democrats’ Inflation Reduction Act that Biden signed into law in August 2022.