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KEY TAKEAWAYS
- President Biden has significantly escalated tariffs on a wide range of Chinese imports, from semiconductors and solar cells to electric vehicles.
- These tariffs represent a substantial increase from previous levels, with those on EVs rising to 100% from 25% this year.
- The changes are projected to affect around $18 billion in current annual imports from China, the White House said.
President Joe Biden imposed sweeping tariffs on a large swath of Chinese imports from steel to semiconductors and electric vehicles on Tuesday, turning up the heat on trade tensions between the two countries as U.S. officials accuse China of overcapacity in manufacturing.
The changes, the culmination of a review of the Section 301 tariffs under former President Donald Trump starting in 2018, are projected to affect around $18 billion in current annual imports, according to the White House.
“Today’s actions to counter China’s unfair trade practices are carefully targeted at strategic sectors,” the White House said in its statement.
Tariffs Jump on Steel, Semiconductors, EVs
The administration said that the tariff rate on certain steel and aluminum products under Section 301 will increase to 25% in 2024 from 0%–7.5%; the rate on semiconductors will increase to 50% by 2025 from 25%; and the rate on electric vehicles will rise to 100% this year from 25%.
Also this year, there will be an increase to 25% from 7.5% on the tariff rate for lithium-ion EV batteries and battery parts, and increase to 50% on solar cells from 25%.
Trade Representative Katherine Tai separately said the report also includes a recommendation for allocating additional funds to U.S. Customs and Border Protection for greater enforcement of the tariffs.
U.S. Efforts to Promote Domestic Manufacturing in Critical Industries
The Biden administration has been spending billions of dollars to promote domestic manufacturing in critical industries in recent months as it seeks to counter what it sees as China’s increasing dominance in many fields.
The CHIPS and Science Act of 2022 has earmarked over $50 billion for investment in semiconductor research and manufacturing facilities to be built in the U.S. after the industry mostly has moved overseas in recent years.