Biden Administration Chinese Trade War Tariffs Start August 1

The United States Trade Representative Katherine Tai said today that she is issuing a formal proposal in the Federal Register to increase tariffs on specific products in strategic sectors including electric vehicles, batteries  and computer chips. The notice also establishes the framework for an exclusion process for machinery, and proposes temporary exclusions for 19 tariff lines for solar manufacturing equipment. The notice establishes a 30-day period for public comment on these tariff changes. This means the EV and battery tariffs start on 1 August 2024.

“Today, I am following through on my commitment to stand up to the People’s Republic of China’s unfair trade practices by issuing a formal proposal to modify the tariff actions,” said Ambassador Katherine Tai. “The President has directed me to make substantial tariff increases on targeted, strategic products, and this is an important step to carry out that vision. The President and I will continue to fight for American workers, and for our economic future and national security.”*

In a Report issued last week, the Trade Representative found that the People’s Republic of China (PRC) has not eliminated its technology transfer related acts, policies, and practices, which continue to impose a burden or restriction on U.S. commerce. The Report also found that the PRC has persisted, and in some cases become aggressive, including through cyber intrusions and cybertheft, in its attempts to acquire and absorb foreign technology. Based on these findings, Ambassador Tai recommended a series of actions to President Biden to further encourage the PRC to eliminate its harmful, acts, policies, and practices.

Key Aspects of the New Tariff Policy as Stated by the Administration

• The tariff rate will increase to 100% on Chinese electric vehicle imports to offset China’s unfair practices and subsidies and level the playing field for U.S. automakers and autoworkers. These practices favor Chinese automakers at the expense of U.S. and other foreign automakers and autoworkers and are leading to a massive surge of unfairly under-priced Chinese vehicles into foreign markets. The President won’t let that happen here.
• The tariff rate will double to 50% on solar cell imports from China. As a result of unfair practices, China’s anticipated manufacturing capacity in solar is more than double the forecasts of near-term global demand. High levels of non-market overcapacity have led to extreme concentration of production in China and underpriced exports that undermine fair competition. China controls more than 70% of global production in each step of the manufacturing process for solar, from polysilicon to solar modules, which creates unacceptable risks for our supply chains and clean energy goals. We’re also closely monitoring attempts by Chinese firms to avoid our trade enforcement remedies outside of China.
• The Section 301 tariff will increase to 25%, triple the current level, on certain steel and aluminum imports from China. The President recently called out unfair trade in steel and aluminum, where China controls over 50% of global production.
• China’s steel producers rely on more carbon-intensive production processes. In contrast, U.S. industries are investing in decarbonization, supported by Department of Energy programs.
• “The President is committed to a stable bilateral relationship with China. He is committed to responsibly managing competition with China, and this action is consistent with that approach. “
• We are working with our partners around the world to address our shared concerns about China’s unfair practices. We know China’s unfair practices have harmed communities in Michigan, in Pennsylvania, and around the country that are now having the opportunity to come back due to President’s Biden’s investment agenda.
• The President’s actions ensure that American business and workers have the opportunity to compete on a level playing field in industries that are vital to our future, such as clean energy and semiconductors.
• The President is taking a tough strategic approach, combining investment at home with enforcement against China in key sectors, in contrast with the prior administration that failed to follow through either on investments, like Foxconn in Wisconsin, or on China’s trade commitments.

Center for Automotive Research Comment

“In 2023, the U.S. imported a total of $19 billion worth of BEVs, of which Chinese BEVs accounted for merely 1.8%. The majority of imported BEVs came from Germany (29.2%), South Korea (23.2%), and Mexico (19.9%), said  Yen Chen, Principal Economist at the Center for Automotive Research in Michigan.

“However, the imports of EV lithium-ion batteries and battery parts present a different picture. Last year, the United States imported 3.5 billion USD worth of lithium-ion batteries for EVs and 15.0 billion USD worth of other lithium batteries and parts, with imports from China accounting for 65.1% and 71.7%, respectively. 

“The new tariffs on Chinese BEVs and batteries will provide U.S. automakers and EV battery suppliers more time to catch up with their Chinese competitors. On the other hand, these tariffs are also likely to limit the source of batteries and battery parts for U.S. automakers, potentially leading to higher prices of BEVs available for U.S. customers. This tariff approach might not be the optimal solution to counteract the Chinese competition, but considering the U.S. manufacturing jobs and employment, it is currently the only available strategy for the United States,” said Yen.  [This was added to the original version of this story on 24 May. – editor]

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