Biden Hits Chinese Electric Vehicles, Chips and Other Goods With Higher Tariffs

Biden Hits Chinese Electric Vehicles, Chips and Other Goods With Higher Tariffs

President Biden announced on Tuesday a sharp increase in tariffs on a range of Chinese imports, including electric vehicles, solar panels, semiconductors and advanced batteries, to protect strategic American industries from a new wave of competitors that he said were unfairly subsidized by Beijing.

The president also formally endorsed maintaining President Donald J. Trump’s tariffs on more than $300 billion in Chinese goods. During his run for the White House in 2020, Mr. Biden criticized these tariffs as taxes on American consumers.

Mr. Biden’s moves were the latest escalation of the trade war by a president who initially promised to repeal at least some of Trump’s tariffs but has now refused to cede ground to his rival in a tough anti-China appeal to swing voters in the country Midwest and beyond.

They also reflect Mr. Biden’s efforts to build on Mr. Trump’s consensus-defying trade conflict with China while focusing it on sectors of strategic importance to the United States, such as clean energy and semiconductors.

In a speech at the White House, Mr. Biden said his administration was “combining investment in America with strategic and targeted tariffs.”

Standing before a crowd that included leaders of several unions and representatives from steel, aluminum and other manufacturers, Mr. Biden compared his approach to that of Mr. Trump.

“My predecessor promised to increase American exports and boost manufacturing,” the president said. “But he did neither. He failed.”

Asked by a reporter after the speech about Mr. Trump’s claim that China is now “eating our lunch” economically, Mr. Biden shot back. “He’s been feeding them for a long time,” Mr. Biden said.

In a sign of newly unraveled trade policy, labor leaders, many Democratic lawmakers, some industry groups and even environmentalists praised Mr. Biden’s decision, while the Republican National Committee sharply criticized it, complaining that Mr. Biden was not tough enough on China.

The National Retail Federation, which represents many companies that source or sell Chinese products, called on Mr. Biden to reverse course and raise tariffs. “As consumers continue to battle inflation, the government should definitely not impose additional taxes on imported products that are paid for by U.S. importers and ultimately U.S. consumers,” David French, the group’s executive vice president of government relations, said in a release .

Few politicians, including Democratic Colorado Governor Jared Polis, followed suit. “This is terrible news for American consumers and a major setback for clean energy,” Mr. Polis wrote in a social media post. “Tariffs are a direct, regressive tax on Americans and this tax increase will impact every family.”

The increased tariffs would apply to about $18 billion worth of annual imports from China, White House officials said. The biggest increase will be the quadrupling of tariffs on Chinese electric vehicles from 25 percent to 100 percent. This move aims to shield a part of the American auto industry that will receive hundreds of billions of dollars in federal grants to help the United States transition to a clean energy future.

Mr. Biden is banking on his efforts to leverage federal investments in heavy industry, including electric vehicles and other green technologies, to create middle-class jobs and help win swing states that are home to parts of those industries. Biden advisers nodded ahead of the trade policy announcement, highlighting states they expected to benefit from the tariffs.

“We know that China’s unfair practices have hurt communities in Michigan and Pennsylvania and across the country that now have the opportunity to return because of President Biden’s investment agenda,” Lael Brainard, the director of the White House National Economic Council, said reporters.

Ms. Brainard also criticized the Trump administration for what she said was a “failed” attempt to force China to change unfair trade practices.

Treasury Secretary Janet L. Yellen, who has previously criticized tariffs as taxes on consumers, said the new levies were justified because China’s excess industrial capacity posed a threat to the United States and its allies, as well as to emerging markets. She said the Biden administration will not allow cheap Chinese exports to hurt American workers.

“President Biden and I have seen firsthand the impact on American communities of the rise of certain artificially cheap Chinese imports in the past, and we will not tolerate it again,” Ms. Yellen said, explaining that the tariffs were not intended as “anti- Tariffs are meant to be China.”

China’s Commerce Ministry criticized the tariffs in a statement, saying China “strongly opposes them.” The statement called the Biden administration’s decision a “typical political manipulation” that would “seriously harm the atmosphere of bilateral cooperation.”

China called on the United States to reverse the decision, saying that “China will take decisive measures to defend its rights and interests.”

Administration officials had long debated reducing some of Mr. Trump’s tariffs – which applied to a wide range of products, including clothing and home lighting – while increasing levies in more strategic areas. But officials pointed to a long-awaited mandatory review by Mr Biden’s trade representative, released on Tuesday, which concluded that China’s disregard for international trade rules necessitated maintaining all tariffs.

Officials said this week they believe American companies that sourced products and components abroad conformed to those initial tariffs or used an official process to request tariff exclusions.

The relative value of the goods subject to Mr. Trump’s original tariffs, compared to the much lower value of those targeted by Mr. Biden, reflects a crucial difference in their competing trade approaches with China.

Mr. Trump has favored sweeping tariffs as a means of leverage against China, as the country’s export economy remains heavily dependent on the American consumer. During his time in office, he attempted to use tariffs to negotiate more favorable trade terms between countries and bring manufacturing jobs back to America, but with little success.

Mr Trump has promised to go further if he wins in November – restricting investment between the two countries and banning some Chinese products from the United States entirely. He has also promised to apply this approach more broadly by subjecting all imports, regardless of their origin, to an additional 10 percent tariff.

Trade experts noted that the political timing likely played a role in the timing and size of the tariffs.

“The zero-sum game of industrial policy that both countries are engaging in, coupled with the upcoming election season in the US, has reached its inevitable climax in the form of rising tariffs on select imports from China,” said Eswar Prasad, the former head of the International Monetary Fund’s China division .

Mr. Biden has chosen to increase Chinese tariffs in areas his administration targets for growth and where the United States has invested huge sums of money, including in clean energy technology and semiconductors.

The share of Chinese solar cells will double to 50 percent. The proportion of certain advanced batteries and the critical minerals required to build them will increase to 25 percent. Semiconductor tariffs will be doubled to 50 percent. Some of these increases will be delayed, apparently to give domestic companies time to ramp up their own production and find other sources outside of China.

Further tariffs will affect industries in key swing states, including heavy metals. For certain imported steel and aluminum products, the rates will be tripled to 25 percent.

The tariffs have been praised by some of the industries hit hardest by cheap Chinese exports.

“As America works to expand manufacturing in key clean energy supply chains to reduce the country’s dependence on China’s supply chains, we must use every tool at our disposal to boost the U.S. solar manufacturing industry,” said Mike Carr, the executive director of the Solar Energy Manufacturers for America Coalition. “The administration made the right decision to strengthen protections for solar components we plan to build in the United States.”

Mr. Biden will also increase tariffs on some medical equipment that officials consider essential to the pandemic response, including face masks and surgical gloves.

U.S. officials described these increases as a suitable antidote to “unfair, anti-market practices” by the Chinese government, including government subsidies for factories and what officials describe as the theft of innovative ideas from foreign competitors.

“China’s forced technology transfer and intellectual property theft have contributed to China controlling 70, 80, and even 90 percent of global production of the critical inputs necessary for our technologies, infrastructure, energy, and health care – posing unacceptable risks to America’s supply chains and the economy created security,” U.S. officials said in a fact sheet distributed ahead of the announcement.

A Chinese Foreign Ministry spokesman said in response to a question about reports of the tariffs at the ministry’s daily news conference on Tuesday that China “will take all necessary measures to protect its legitimate rights and interests.”

Many economists oppose tariffs because they tend to act like an effective tax on domestic consumers by raising prices. U.S. officials said this week they did not expect the increased tariffs to increase price increases – already uncomfortably rapid for many consumers – because they only aim at a limited target.

Labor leaders and Democratic lawmakers were expected to support the announcement, although some Democrats, such as Senator Sherrod Brown of Ohio, have already called on Mr. Biden to go further and ban Chinese electric vehicles.

The imposition of tariffs, first by Mr. Trump and now by Mr. Biden, reflects a growing awareness — inside and outside Washington — of Chinese trade practices that have cost American workers their jobs, said Adam Hodge, chief executive of communications firm Bully Pulpit International in Washington and former spokesman for Mr. Biden’s trade envoy and the National Security Council.

“We got smart,” Mr. Hodge said. “It’s smart policy because it responds to what Americans are seeing in communities across the country.”

Siyi Zhao contributed research from Seoul.

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2024-05-14 17:08:14