Today, the Biden Administration announced that it will keep most current tariffs on Chinese goods but raise them on goods critical to strategic industries such as clean technology, electric vehicles (EVs), semiconductors, and steel and aluminum.

In a statement this morning, United States Trade Representative (USTR) Katherine Tai said that President Biden is directing “me to take further action to encourage the elimination of the People’s Republic of China’s unfair technology transfer-related policies and practices that continue to burden U.S. commerce and harm American workers and businesses…while the tariffs have been effective in encouraging the PRC to take some steps to address the issues identified in the Section 301 investigation, further action is required.”

USTR was widely believed to be poised to keep the majority of current tariffs on China although it has been looking at assessing other trade remedies in discrete areas such as shipping. The wider hikes, taken in conjunction with this particular review of the existing tariff regime, comes more as a surprise although President Biden recently suggested a 100% tariff on Chinese EVs.

Under today’s announcement:

• Chinese EVs will face a 100% tariff (up from 25% before the additional 2.5% under normal trading rules);
• Chinese solar panels and semiconductors will face a 50% tariff (up from 25%);
• Tariffs will also increase on a host of products including steel and aluminum products, batteries, graphite and other critical minerals, and certain medical products.

According to the White House, this will affect roughly $18 billion in imports from China.

The comment period will not begin until today’s announcement takes the form of a proposal in the Federal Register. That is expected to occur sometime next week.

Today’s announcement also contains recommendations for: “(1) establishing an exclusion process targeting machinery used in domestic manufacturing, including proposals for 19 exclusions for certain solar manufacturing equipment; (2) allocating additional funds to United States Customs and Border Protection for greater enforcement of Section 301 actions; (3) greater collaboration and cooperation between private companies and government authorities to combat state-sponsored technology theft; and (4) continuing to assess approaches to support diversification of supply chains to enhance our own supply chain resilience.”

Note: not all the newly increased tariffs take place this year, a measure designed to give U.S. manufacturing a lead time to adjust, particularly in regards to EVs and solar technology:

Source, USTR

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