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Biden Slaps Higher Tariffs on Chinese EV Batteries, Chips

May 16, 2024
Finance
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U.S. President Joe Biden on Tuesday unveiled a bundle of steep tariff increases on an array of Chinese imports, including electric vehicle (EV) batteries, 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. Biden will keep tariffs put in place by his Republican predecessor Donald Trump while ratcheting up others, including a quadrupling of EV duties to over 100% and doubling the duties on semiconductor tariffs to 50%. The new measures affect $18 billion in imported Chinese goods including steel and aluminium, semiconductors, electric vehicles, critical minerals, solar cells and cranes. The United States imported $427 billion goods from China in 2023 and exported $148 billion to the world’s No. 2 economy.

The revised tariffs were justified because China was stealing U.S. intellectual property. But Tai recommended tariff exclusions for hundreds of industrial machineries import categories from China, including 19 for solar product manufacturing equipment. Their measures are combined with domestic investment in key industries and unlikely to worsen a bout of inflation that has already angered U.S. voters and imperilled Biden’s re-election bid. Biden has struggled to convince voters of the efficacy of his economic policies despite a backdrop of low unemployment and above-trend economic growth.

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 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. Some 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. More tariffs will follow in 2025 and 2026 on semiconductors, as well as lithium-ion batteries that are not used in electric vehicles, graphite and permanent magnets as well as rubber medical and surgical gloves.

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