Key Points:
- Tariffs on key Chinese imports like Electric Vehicles and semiconductors have doubled, affecting $18 billion worth of goods.
- Biden’s defence claims this proactive strategy is not a trade war but a competition, contrasting Trump’s approach.
President Joe Biden has recently intensified the trade standoff between the United States and China by imposing major new tariffs on various Chinese imports. This move not only continues the economic policies from Donald Trump’s presidency but also escalates them significantly, drawing sharp criticism and promises of retaliation from China. The revised tariffs target high-tech industries crucial to future economic competition, such as electric vehicles (EVs) and semiconductors.
Sector Shock: Electric Vehicle Tariffs Surge to 102.5%
The new tariff regime has brought substantial increases that could reshape several critical sectors. Tariffs on EVs have dramatically increased from 25% to 102.5%, directly affecting the burgeoning electric vehicle market in the US. Similarly, tariffs on semiconductors have doubled to 50%.
In comparison, those on lithium-ion EV batteries and parts have tripled to 25%. Furthermore, tariffs on photovoltaic cells, essential for the solar power industry, have also doubled to 50%. These increases are part of a broader strategy. They aim to curb China’s dominance in these essential sectors. Additionally, more tariffs are planned for the coming years. These will target other critical materials, such as non-EV lithium-ion batteries and permanent magnets.
Biden’s Tariff Strategy Provokes China
President Biden asserted that the new tariff strategy aimed not to initiate a trade war but to secure victory in the era of global competition. His criticism of former President Trump underscores the shift from reactive to proactive measures against perceived unfair trade practices. In response to these aggressive adjustments, China has vowed to retaliate, which could lead to further economic strain between the two powers.
Electric Vehicle: $18B of Imports Face New Tariffs
US trade statistics show that the revised tariffs affect approximately $18 billion of imported Chinese goods. This move has worsened Washington’s delicate trade balance. In 2023, imports from China reached $427 billion, while exports stood at $148 billion. The policy has found support among certain domestic groups, such as the United Auto Workers, who view the tariffs as necessary for a fair EV transition. However, analysts warn that these tariffs could inflate EV costs significantly, potentially undermining broader climate change goals.
Trade Policies Could Tip 2024 Election Amid Economic Fears
Despite the low unemployment rates and robust economic growth, the trade tensions with China pose a significant risk to the US economy’s stability. Recent polls show a preference for Trump over Biden on economic management, reflecting concern about the impact of trade policies.
