Biden Implements Sweeping Tariffs on Chinese Goods to Protect Key Industries

u.s. flag melding into the china flag

From steel to solar, extensive U.S. tariffs will reshape the trade landscape with China. (Photo Credit: Generated by DALL-E, OpenAI)

by | May 14, 2024

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Overview of Tariff Increases

As part of President Biden’s strategy to protect American workers and industries from unfair trade practices by China, several tariff rate increases have just been announced. These increases target key sectors crucial for America’s economic future and national security. Here is a summary of the affected sectors and their new tariff rates:

SectorCurrent Tariff RateNew Tariff RateEffective Year
Steel and Aluminum0–7.5%25%2024
Semiconductors25%50%2025
Electric Vehicles (EVs)25%100%2024
Lithium-ion EV Batteries7.5%25%2024
Lithium-ion Non-EV Batteries7.5%25%2026
Battery Parts7.5%25%2024
Natural Graphite0%25%2026
Permanent Magnets0%25%2026
Other Critical Minerals0%25%2024
Solar Cells25%50%2024
Ship-to-Shore Cranes0%25%2024
Syringes and Needles0%50%2024
PPE (Respirators, Face Masks)0–7.5%25%2024
Rubber Medical Gloves7.5%25%2026

 

Detailed Breakdown of Affected Sectors

Steel and Aluminum

The U.S. has allocated $6 billion to 33 clean manufacturing projects, including steel and aluminum initiatives, significantly backed by the Bipartisan Infrastructure Law and the Inflation Reduction Act. This funding marks the construction of the first new primary aluminum smelter in 40 years and positions the United States as a pioneer in converting clean hydrogen into steel. These strategic investments aim to enhance the competitiveness of the U.S. steel industry, branding it as the world’s cleanest major steel producer.

Concurrently, these actions are designed to protect American workers and industries from China’s non-market overcapacity and unfair trade practices in steel and aluminum, which not only undercut high-quality U.S. products with low-priced alternatives but also maintain higher emissions.

Semiconductors

China’s aggressive expansion in the legacy semiconductor sector, expected to represent nearly half of all new global capacity in the next three to five years, has heightened risks of market distortion and underscored vulnerabilities in the supply chain, as seen during recent disruptions that spiked prices in various products from automobiles to medical devices. In response, the United States is bolstering its semiconductor industry with a substantial nearly $53 billion initiative under the CHIPS and Science Act.

This act revitalizes domestic manufacturing through $39 billion in direct incentives and a 25% investment tax credit, to be reinforced by increased tariffs to ensure long-term investment sustainability.

Electric Vehicles

With a dramatic 70% increase in China’s EV exports from 2022 to 2023, fueled by extensive subsidies and non-market practices, there is a substantial risk of global market overcapacity that threatens productive investments in other regions. In response, a 100% tariff rate on EVs is being implemented to shield American manufacturers from China’s unfair trade practices, with a measure designed to ensure the U.S. auto industry’s future is forged by American workers. The Biden Administration is bolstering the domestic EV market through various supports including business tax credits for battery manufacturing and critical mineral production, consumer tax credits for EV purchases, smart regulatory standards, federal investments in EV charging infrastructure, and grants for EV and battery manufacturing sectors. This increase in tariffs is designed to protect these strategic investments and the associated American jobs from the impact of low-priced Chinese EV imports.

Batteries and Critical Minerals

China controls over 80% of critical aspects of the battery supply chain, especially in the areas of mining, processing, and refining of critical minerals. This dominance poses significant risks to the reliability of U.S. supply chains, threatening both national security and clean energy objectives. In response, the U.S. has implemented a comprehensive investment strategy to strengthen domestic capabilities and global supply chain resilience. Nearly $20 billion has been committed through initiatives including the Bipartisan Infrastructure Law, the Defense Production Act, and the Inflation Reduction Act to boost U.S. production of advanced batteries and related materials. These efforts are supplemented by manufacturing tax credits under the Inflation Reduction Act to spur further domestic investments. Additionally, the establishment of the American Battery Materials Initiative seeks to secure a dependable supply chain for battery components through a coordinated government effort.

Solar Cells

The tariff increase on solar cells addresses China’s overcapacity in the solar sector, which suppresses prices and hampers global solar development. China controls up to 90% of some parts of the solar supply chain, leveraging unfair practices to flood markets with low-cost solar products, thereby deterring foreign investment in solar manufacturing. Significant investments in the U.S. solar supply chain, supported by the Inflation Reduction Act, provide tax incentives for essential solar components and support large-scale and residential solar projects. These measures have spurred an eightfold increase in U.S. solar manufacturing capacity, poised to supply millions of homes with solar panels by 2030.

Ship-to-Shore Cranes

Port cranes play a vital role in the continuous flow of critical goods across the United States, and actions are being taken to mitigate risks that could disrupt American supply chains. This tariff implementation is part of broader efforts to enhance U.S. port infrastructure, including bringing port crane manufacturing back to the United States to bolster supply chain security. Additionally, it encourages the use of trusted vendors for sourcing cranes and other heavy equipment by ports nationwide and globally.

Medical Products

The increases in tariff rates are designed to support strong domestic production for medical supplies critical for daily care in hospitals and medical practices across the country. Significant investments have been made by both the federal government and the private sector to enhance domestic manufacturing of these and other medical products, ensuring that American healthcare workers and patients have reliable access to critical medical supplies. These measures also address the challenges faced by American businesses competing against underpriced, sometimes poor-quality Chinese-made supplies that can pose safety risks to healthcare workers and patients.

Implications and Outlook

The strategic increase in tariffs targets key sectors to counteract China’s unfair trade practices and bolster domestic industries. By investing in clean energy, advanced manufacturing, and critical infrastructure, the administration aims to create and sustain high-quality American jobs while ensuring fair competition and national security. These measures provide a framework for business and industry leaders to navigate the evolving economic landscape and make informed decisions to strengthen their operations.

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