U.S. President Joe Biden has announced his decision to impose additional tariffs on a number of products imported from China. Speaking from the White House after announcing new tariffs he has ordered on Chinese electric vehicles, semiconductors, aluminum, steel and other imported products, Biden vowed that “the future of electric vehicles will be made in America by union workers”. “For years the Chinese government has poured state money to Chinese companies across a whole range of industries, pushing Chinese companies to produce far more than the rest of the world can absorb, then dumping the excess products onto the market at unfairly low prices, driving other manufacturers around the world out of business,” he said. The products amount to USD18 billion of Chinese imports.
Under the plan, following a public comment period, tariffs would rise to 100% from 27.5% on Chinese EVs and to 50% on semiconductors and solar cells produced in the country. Tariffs on lithium-ion vehicle batteries and battery parts would rise to 25%. Chinese medical supplies such as syringes and needles will also face additional tariffs of 50%.
The full list is available in the PDF version of the weekly.
The increases are expected to be implemented from this year through 2026, depending on the items. Biden’s move is the latest chapter in a trade war started by his predecessor Donald Trump in 2018 to address restrictions on access to China’s market, including policies that force foreign companies operating in the country to transfer technology to domestic firms.
Both men, who are running against each other this year in a rematch of the 2020 presidential election, have made talking tough on China a feature of their campaigns. In his speech from the White House, Biden took aim at Trump’s efforts to counter China nearly as much as he blamed Beijing for the loss of American manufacturing jobs. “My predecessor promised to increase American exports and boost manufacturing, but he did neither,” Biden said. “He signed a trade deal with China. They’re supposed to buy USD200 billion more in American goods. Instead, China’s imports from America barely budged.” Biden was referring to a phase-one deal that Trump brokered with China in 2019, and signed in January 2020, ending threatened tariffs on around USD155 billion worth of Chinese imports that were set to take effect at the end of that year, and halving tariffs to 7.5% on another USD120 billion in goods.
But the deal kept in place the 25% import taxes on USD250 billion worth of Chinese products. In exchange, China pledged to buy, over two years, at least USD200 billion more in American goods and services than it did in 2017, including about USD40 billion in agricultural goods. U.S. exports to China rose from USDD106 billion in 2019 to USD125 billion in 2020. Exports have ranged between USD148 billion and USD154 billion since. The U.S. imported USD504 billion worth of Chinese goods in 2021 and USD433 billion in 2020, compared with USD449 billion in 2019, according to U.S. Census data. These imports rose again to USD536 billion in 2022, before dropping to USD427 billion last year. China exports very few EVs to the U.S., with Geely being the only Chinese EV maker that exported to the U.S. in the first quarter. In terms of solar cells, exports to the U.S. only accounted for less than 0.1% of China's total exports in 2023. The export of solar panels from China to the U.S. has significantly decreased over the past years due to U.S.' protectionism.
The Biden Administration’s top economic officials, including Commerce Secretary Gina Raimondo and Treasury Secretary Janet Yellen, had been signaling the tariff action for weeks, insisting that the coming measures would be as targeted as possible and tailored to avoid a broader decoupling of the two economies. Tai cited the need “to encourage further elimination of the PRC’s technology transfer-related acts, policies and practices” in her announcement about the new tariffs. Former U.S. President Donald Trump has said he would raise all tariffs on China by 60% if he won the November presidential election and took office in January 2025.
The impact of additional tariffs on the Chinese steel industry is likely to be minimal given the small size of direct trade, said analysts. However, certain industries that are considered large steel consumers, like electric vehicles and port cranes, are also subject to additional tariffs, which might affect China’s indirect export of steel to the U.S. China accounted for less than 1% of U.S. steel imports in the first two months of 2024, and the U.S. accounted for just 0.8% of Chinese steel exports, according to S&P Global.
The Chinese government reacted quickly to the tariff announcement, which had already been leaked to several media outlets. Ministry of Foreign Affairs Spokesperson Wang Wenbin said that China would take “full necessary measures to safeguard its legitimate rights and interests”, and Liu Pengyu, Spokesperson for the Chinese Embassy in Washington, called Biden’s allegations of subsidies, price distortions and overcapacity a “false narrative”. Liu attributed China’s successes in EVs to its “mega markets, complete mature industrial system, human resources and also strong investment in research and innovation”. He added that 87% of the electric vehicles produced in China last year were sold domestically, and that only 0.8% of the total exports were sold in the U.S. He also said that EVs produced in China by the American automaker Tesla accounted for nearly one-third of China’s total electric car exports last year.
China's Ministry of Commerce (MOFCOM) accused the U.S. of “making mistakes again and again” and said the proposed tariff hikes violated President Joe Biden’s commitments to avoid decoupling from China and “not to seek to suppress and contain China’s development”. “This will seriously affect the atmosphere of bilateral cooperation,” the MOFCOM statement says. “The United States should immediately correct its wrongdoing and cancel the additional tariffs imposed on China.”
Chinese authorities have rejected claims that they are exporting excess industrial capacity, calling suspicions in the West an excuse to pursue trade protectionism. The Chinese leadership has also contended that China’s global dominance in the production of three key energy transition products – electric vehicles, batteries and solar panels – is the result of competitiveness. The China Association of Automobile Manufacturers (CAAM) slammed the U.S.' imposing higher import tariffs on Chinese electric vehicles, saying the industry's development needs global cooperation. Some U.S. officials expect a firm response from China on the new tariffs. U.S. Treasury Secretary Janet Yellen said that the U.S. could see a “significant” response from China.
Meanwhile, the U.S. House of Representatives' House Committee on Oversight and Accountability approved a bill preventing federal agencies from contracting with five Chinese biotech companies – BGI Group, MGI, Complete Genomics, Wuxi AppTec, and Wuxi Biologics, and their clients. The purpose is to push U.S. firms to reduce reliance on Chinese manufacturing and research due to national security concerns about China’s biotech industry. To become law, the bill must pass the full House and Senate, and then be signed by President Biden. “U.S. taxpayer dollars should not be funding PRC biotech companies that are actively working with the Chinese Communist Party and the People’s Liberation Army to potentially collect Americans’ genomic data and intellectual property and use that data to further their authoritarian objectives,” said Democratic Representative Raja Krishnamoorthi of Illinois. He accused BGI, a genomics company, of using DNA from millions around the world without their consent on genomic projects conducted by the Chinese military.
This overview is based on reports by the Global Times, the China Daily and the South China Morning Post.
