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Jimmy Williams
President Joe Biden announced on Tuesday that his administration is raising tariffs on $18 billion worth of Chinese exports, including electric vehicles. This move is part of the White House’s strategy to counter what it considers unfair trade practices by China.
The U.S. escalation marks a new phase in the trade tensions between the world’s two largest economies. Some economists view this as a volatile trade war as both nations strive for economic supremacy.
The White House revealed that the tariff rate for electric vehicles (EVs) will quadruple, increasing from 25% to 100% this year. China’s top EV manufacturer, BYD, sells these vehicles for as low as $10,000.
“China’s using the same playbook it has before to power its own growth at the expense of others by continuing to invest despite excess Chinese capacity and flooding global markets with exports that are underpriced due to unfair practices,” said Lael Brainard, the White House national economic adviser. “China’s simply too big to play by its own rules.”
China denied the accusations of overcapacity as “groundless” and accused the U.S. of attempting to stifle global competition.
The Chinese Foreign Ministry stated on Tuesday that Beijing “consistently opposes unilateral tariff increases” that violate World Trade Organization rules. Spokesperson Wang Wenbin said, “China will take all necessary measures to safeguard its legitimate rights and interests.”
The Chinese Commerce Ministry has yet to comment on the new tariffs.
The Biden administration had been signaling this move for weeks. Last month, Biden called for tripling tariffs on Chinese steel and aluminum.
The White House specified the following tariff increases on Tuesday:
– Certain steel and aluminum products will rise from 0–7.5% to 25% this year.
– Battery parts will increase from 7.5% to 25%.
– Lithium-ion EV batteries will jump from 7.5% to 25% this year, while lithium-ion non-EV batteries will rise from 7.5% to 25% in 2026.
– Certain critical minerals will increase from zero to 25% this year.
– Solar cells will increase from 25% to 50% this year.
– Syringes and needles will go from zero to 50% this year.
– Certain personal protective equipment, including certain respirators and masks, will increase from 0–7.5% to 25% this year.
– Semiconductors will increase from 25% to 50% by 2025.
– Natural graphite and permanent magnets will increase from zero to 25% in 2026.
– Rubber medical and surgical gloves will increase from 7.5% to 25% in 2026.
Critics argue that higher tariffs often lead to increased consumer prices and inflation. However, the administration insisted that this would not be the case here.
“There’s no inflationary impact of these actions,” a senior administration official said. “They’re mainly targeting strategic sectors where we are racking up domestic investment.”
The official argued that a 10% across-the-board tariff would pose a greater risk to consumers. Former President Donald Trump, the presumptive Republican nominee, has suggested a 10% tariff on all imports.
Another senior administration official said, “The previous administration’s restrictive efforts were not paired with affirmative inducements for companies to make investments in strategic sectors. This strategy includes a diplomatic effort to have like-minded countries join us in confronting China’s trade practices. So this is a very different strategy in which tariffs are not a stand-alone strategy.”
The Trump campaign criticized Biden’s planned tariff hike. “After spending much of his presidency fighting to undo President Trump’s trade policies, Biden’s failure to protect American manufacturers is coming back to haunt his administration,” said Karoline Leavitt, a Trump campaign spokesperson. “The forgotten men and women know President Trump is the only one who has been and will be tough on China.”
The Biden administration is trying to balance lowering the cost of clean energy in the U.S. and protecting American manufacturing.
“The Biden administration has two competing goals,” said Alex Durante, an economist for the Tax Foundation. “Tariffs, in general, are bad economic policy. I think the administration should be moving away from them.”
