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Picture: REUTERS
Picture: REUTERS

Washington— US President Joe Biden on Tuesday unveiled a bundle of steep tariff increases on an array of Chinese imports including electric vehicles, computer chips and medical products, risking an election-year standoff with Beijing in a bid to woo voters who give his economic policies low marks.

China immediately vowed retaliation. Its commerce ministry said China was opposed to the US tariff hikes and would take measures to defend its interests, urging the US to cancel the measures.

Biden will keep tariffs put in place by his Republican predecessor Donald Trump while ratcheting up others, including a quadrupling of EV duties to more than 100%, the White House said. It cited “unacceptable risks” to US economic security posed by what it considers unfair Chinese practices that are flooding global markets with cheap goods.

The new measures affect $18bn in Chinese imported goods including steel and aluminium, semiconductors, batteries, critical minerals, solar cells and cranes, the White House said.

The US imported $427bn in goods from China in 2023 and exported $148bn to the world’s second-largest economy, according to the US Census Bureau, a trade gap that has persisted for decades and become an ever more sensitive subject in Washington.

“China’s using the same playbook it has before to power its own growth at the expense of others by continuing to invest, despite excess Chinese capacity and flooding global markets with exports that are underpriced due to unfair practices,” White House national economic adviser Lael Brainard told reporters.

US trade representative Katherine Tai said the revised tariffs were justified because China was continuing to steal US intellectual property and in some cases had become “more aggressive” in cyber intrusions targeting American technology.

She said prior “Section 301” tariffs had minimal impact on US economywide prices and employment, but had been effective in reducing US imports of Chinese goods, while increasing imports from other countries.

Took aim

But Tai recommended tariff exclusions for dozens of industrial machinery import categories from China, including 19 for solar product manufacturing equipment.

Even as Biden’s steps fell in line with Trump’s premise that tougher trade measures are warranted, the Democrat took aim at his opponent in November’s election.

The White House said Trump’s 2020 trade deal with China did not increase American exports or boost American manufacturing jobs, and it said the 10% across-the-board tariffs on goods from all points of origin that Trump has proposed would frustrate US allies and raise prices. Trump has floated tariffs of 60% or higher on all Chinese goods.

Administration officials said their measures are “carefully targeted”, combined with domestic investment, plotted with close allies and unlikely to worsen a bout of inflation that has already angered US voters and imperilled Biden’s reelection bid. They also downplayed the risk of retaliation from Beijing.

Biden has struggled to convince voters of the efficacy of his economic policies despite a backdrop of low unemployment and above-trend economic growth. A Reuters/Ipsos poll last month showed Trump had a seven percentage-point edge over Biden on the economy.

Analysts have warned that a trade tiff could raise costs for EVs overall, hurting Biden’s climate goals and his aim to create manufacturing jobs.

Biden has said he wants to win this era of competition with China but not to launch a trade war that could hurt the mutually dependent economies. He has worked in recent months to ease tensions in one-on-one talks with Chinese President Xi Jinping.

Both 2024 US presidential candidates have sharply departed from the free-trade consensus that once reigned in Washington, a period capped by China joining the World Trade Organisation in 2001.

Critical minerals

China has said the tariffs are counterproductive and risk inflaming tensions. Trump’s broader imposition of tariffs during his 2017-21 presidency kicked off a tariff war with China.

As part of the long-awaited tariff update, Biden will increase tariffs this year under Section 301 of the Trade Act of 1974 from 25% to 100% on EVs, bringing total duties to 102.5%, from 7.5% to 25% on lithium-ion EV batteries and other battery parts and from 25% to 50% on photovoltaic cells used to make solar panels. “Certain” critical minerals will have their tariffs raised from nothing to 25%.

The tariffs on ship-to-shore cranes will rise to 25% from zero, those on syringes and needles will rise to 50% from nothing now and some personal protective equipment (PPE) used in medical facilities will rise to 25% from as little as 0% now. Shortages in PPE made largely in China hampered the US’ Covid-19 response.

More tariffs will follow in 2025 and 2026 on semiconductors, the tariff rate of which will double to 50%, as well as lithium-ion batteries that are not used in elective vehicles, graphite and permanent magnets as well as rubber medical and surgical gloves.

A step Biden previously announced to raise tariffs on some steel and aluminium products will take effect this year, the White House said.

A number of legislators have called for huge hikes on Chinese vehicle tariffs. There are relatively few Chinese-made light-duty vehicles being imported now. Senate banking committee chair Sherrod Brown wants the Biden administration to ban Chinese EVs outright, over concerns they pose risks to Americans’ personal data.

US Treasury secretary Janet Yellen, who warned China in April that its excess production of EVs and solar products was unacceptable, said that such concerns were widely shared by US allies and the actions were “motivated not by anti-China policy but by a desire to prevent damaging economic dislocation from unfair economic practices”.


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