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Trade war: President Biden sharply hikes US tariffs on many Chinese imports

Trade war: President Biden sharply hikes US tariffs on many Chinese imports

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Virendra Pandit

New Delhi: Intensifying his predecessor’s trade war against China, President Joe Biden on Tuesday announced steep tariff increases on several categories of Chinese imports including electric vehicles, computer chips, and medical products, risking an election-year standoff with Beijing in a bid to woo voters dissatisfied with his economic policies.

Democrat President Biden will also continue tariffs imposed by his Republican predecessor Donald Trump, who is challenging him again for the November 2024 elections, while ratcheting up others, the White House said, citing “unacceptable risks” to America’s “economic security” posed by ‘unfair Chinese practices’ that are flooding global markets with cheap goods.

The new measures impact USD 18 billion in Chinese imported goods including steel and aluminum, semiconductors, batteries, critical minerals, solar cells, and cranes.

According to the US Census Bureau, America imported USD 427 billion in goods from China in 2023 and exported to it those worth USD 148 billion, highlighting a trade gap that persisted for decades and became a highly sensitive subject in Washington, the media reported on Wednesday.

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

Although these measures are in tune with Trump’s premise that tougher trade measures are warranted, the White House said the former President’s 2020 trade deal with China did not increase American exports or boost American manufacturing jobs. It said the 10 percent across-the-board tariffs on goods from all points of origin that Trump proposed would frustrate US allies and raise prices. The Republican hopeful has promised at least 60 percent tariffs on all Chinese goods.

The Biden administration said its measures are “carefully targeted,” combined with domestic investment, plotted with close allies, and unlikely to worsen inflation that has already angered US voters and imperiled the incumbent’s re-election bid. Officials also downplayed the risk of retaliation from Beijing.

Biden has been trying to convince voters of the efficacy of his economic policies despite a backdrop of low unemployment and above-trend economic growth. In April, Trump had a 7 percentage-point edge over Biden on the economy.

This trade tiff could raise costs for EVs overall, hurting President Biden’s climate goals and his aim to create manufacturing jobs. He 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. In recent months, he also tried to ease tensions in one-on-one talks with Chinese President Xi Jinping.

Both the presidential candidates this year have sharply departed from the free-trade consensus that once reigned in Washington, after which China joined the World Trade Organization (WTO) in 2001.

China, burdened with manufacturing overcapacity, said the tariffs are counterproductive and risk inflaming tensions. Trump’s broader imposition of tariffs during his 2017-2021 presidency kicked off a tariff war with China.

As part of the long-awaited tariff update, Biden will increase tariffs in 2024 from 25 percent to 100 percent on EVs, 7.5 percent to 25 percent on lithium-ion EV batteries and other battery parts, and from 25 percent to 50 percent on photovoltaic cells used to make solar panels. “Certain” critical minerals will have their tariffs raised from nothing to 25 percent.

The tariffs on ship-to-shore cranes will rise from zero to 25 percent, those on syringes and needles from nil to 50 percent, and some personal protective equipment (PPE) used in medical facilities will increase from zero to 25 percent. Shortages in PPE made largely in China hampered the United States’ COVID-19 response.

More tariffs will follow in 2025 and 2026 on semiconductors, whose tariff rate will double to 50 percent, 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. Tariffs on some steel and aluminum products will also take effect this year, the White House said.

Several lawmakers had been pressing for massive hikes on Chinese vehicle tariffs. Relatively fewer Chinese-made light-duty vehicles are being imported now.

Senate Banking Committee Chairman Sherrod Brown wanted the Biden administration to ban Chinese EVs outright, over concerns they pose risks to Americans’ personal data.


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