Biden hikes tariffs on China
WASHINGTON — President Joe Biden slapped major new tariffs on Chinese electric vehicles, advanced batteries, solar cells, steel, aluminum and medical equipment on Tuesday, taking potshots at Donald Trump along the way as he embraced a strategy that’s increasing friction between the world’s two largest economies.
The Democratic president said that Chinese government subsidies ensure the nation’s companies don’t have to turn a profit, giving them an unfair advantage in global trade.
“American workers can outwork and outcompete anyone as long as the competition is fair,” Biden said in the White House Rose Garden. “But for too long, it hasn’t been fair. For years, the Chinese government has poured state money into Chinese companies … it’s not competition, it’s cheating.”
The tariffs come in the middle of a heated campaign between Biden and Trump, his Republican predecessor, to show who’s tougher on China. In a nod to the presidential campaign, Biden recognized lawmakers from Michigan in his remarks and spoke about workers in Pennsylvania and Wisconsin, all battleground states in November’s election.
Asked to respond to Trump’s comments that China was eating America’s lunch, Biden said of his rival, “He’s been feeding them a long time.” The Democrat said Trump had failed to crack down on Chinese trade abuses as he had pledged he would do during his presidency.
Karoline Leavitt, the Trump campaign’s press secretary, called the new tariffs a “weak and futile attempt” to distract from Biden’s own support for EVs in the United States, which Trump says will lead to layoffs at auto factories.
The Chinese government was quick to push back against the tariffs, saying they “will seriously affect the atmosphere of bilateral cooperation.” The foreign ministry used the word “bullying.”
The tariffs are unlikely to have much of an inflationary impact because of how they’re structured. Biden administration officials said they think the tariffs won’t escalate tensions with China, yet they expect China will explore ways to respond to the new taxes on its products. It’s uncertain what the long-term impact on prices could be if the tariffs contribute to a wider trade dispute.
The tariffs are to be phased in over the next three years, with those that take effect in 2024 covering EVs, solar cells, syringes, needles, steel and aluminum and more. There are currently very few EVs from China in the U.S., but officials worry low-priced models made possible by Chinese government subsidies could soon start flooding the U.S. market.
Chinese firms can sell EVs for as little as $12,000. China’s solar cell plants and steel and aluminum mills have enough capacity to meet much of the world’s demand, with Chinese officials arguing their production keeps prices low and would aid a transition to the green economy.
China’s commerce ministry said in a statement that the tariffs were “typical political manipulation” as it expressed its “strong dissatisfaction” and pledged to “take resolute measures to defend its rights and interests.”
Under the findings of a four-year review on trade with China, the tax rate on imported Chinese EVs will rise to 102.5% this year, up from total levels of 27.5%.
The review was undertaken under Section 301 of the Trade Act of 1974, which allows the government to retaliate against trade practices deemed unfair or in violation of global standards.
Under the 301 guidelines, the tariff rate is to double to 50% on solar cell imports this year. Tariffs on certain Chinese steel and aluminum products will climb to 25% this year. Computer chip tariffs will double to 50% by 2025.
For lithium-ion EV batteries, tariffs will rise from 7.5% to 25% this year. But for non-EV batteries of the same type, the tariff increase will be implemented in 2026. There are also higher tariffs on ship-toshore cranes, critical minerals and medical products.
The new tariffs, at least initially, are largely symbolic since they will apply to only about $18 billion in imports. A new analysis by Oxford Economics estimates the tariffs will have a barely noticeable impact on inflation by pushing up inflation by just 0.01%.