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Joe Biden Imposes Higher Tariffs on Chinese Electric Cars and Computer Chips; Beijing Promises Retaliation
President Joe Biden has announced higher tariffs on Chinese imports, including electric vehicle batteries and computer chips. China has vowed retaliation against the US, setting the stage for a potential trade war. Biden plans to maintain some of the tariffs implemented by his predecessor, Donald Trump, while increasing others.
The list includes electric vehicle (EV) batteries, computer chips, and medical products. This decision risks escalating tensions with Beijing and could potentially lead to a standoff between the two economic powerhouses.
China wasted no time in vowing retaliation against the US. The country's commerce ministry expressed its opposition to the tariff hikes and promised to take measures to protect its own interests. This tit-for-tat exchange sets the stage for a potential trade war between the two nations.
While Biden plans to maintain the tariffs implemented by his predecessor, Donald Trump, he intends to raise others. This includes quadrupling the duties on EVs to over 100% and doubling the tariffs on semiconductors to 50%. The White House stated that these measures will affect $18 billion worth of imported Chinese goods, ranging from steel and aluminum to critical minerals, solar cells, and cranes.
The trade gap between the US and China has been a longstanding issue, with the US importing $427 billion in goods from China in 2023 and exporting only $148 billion. Biden's economic adviser, Lael Brainard, highlighted China's unfair practices such as forced technology transfer, intellectual property theft, and unfair subsidies. Brainard emphasised that the president's actions are tough but strategic, targeting sectors where China has built excessive over-capacity.
US Trade Representative Katherine Tai justified the revised tariffs by accusing China of stealing US intellectual property. However, Tai recommended tariff exclusions for hundreds of industrial machinery import categories from China, including those related to solar product manufacturing equipment.
While Biden's tariff measures align with Trump's stance on trade, the president criticised his predecessor's 2020 trade deal with China, claiming that it did not increase American exports or jobs. The White House also expressed concerns that Trump's proposed across-the-board tariffs of 10% on goods from all origins would frustrate US allies and raise prices. Trump had even suggested tariffs of 60% or higher on all Chinese goods.
Administration officials believe that these measures, combined with domestic investment in key industries, will not exacerbate the current bout of inflation. Biden has faced challenges in convincing voters of the effectiveness of his economic policies, despite low unemployment rates and above-average economic growth. Recent polls have shown that Trump holds a 7 percentage-point advantage over Biden on the economy.
Trump himself weighed in on the situation, suggesting that the new tariffs should be extended to other types of vehicles and products due to China's dominance in the market. Analysts have warned that a trade dispute could increase costs for EVs, potentially hindering Biden's climate goals and his aim to create more manufacturing jobs.
Biden has expressed his desire to compete with China without launching a full-blown trade war. He has engaged in one-on-one talks with Chinese President Xi Jinping to ease tensions. However, both Biden and his potential 2024 presidential opponent have departed from the free-trade consensus that once prevailed in Washington.
As part of the tariff update, Biden plans to increase tariffs this year on EVs, lithium-ion EV batteries, photovoltaic cells, and certain critical minerals. Tariffs on ship-to-shore cranes, syringes and needles, and personal protective equipment (PPE) used in medical facilities will also see significant increases. More tariffs are expected in the coming years on semiconductors, lithium-ion batteries not used in EVs, graphite, permanent magnets, and rubber medical and surgical gloves.
The decision to impose higher tariffs on Chinese vehicles has garnered support from lawmakers who have raised concerns about data privacy. However, there are currently few Chinese-made light-duty vehicles being imported into the US. The United Auto Workers, a politically influential union that endorsed Biden, believes that these tariff moves will ensure a fair transition to electric vehicles.
President Joe Biden has announced higher tariffs on Chinese imports, including electric vehicle batteries and computer chips.
China has vowed retaliation against the US, setting the stage for a potential trade war.
Biden plans to maintain some of the tariffs implemented by his predecessor, Donald Trump, while increasing others.
Source: HINDUSTAN TIMES