WASHINGTON -- The Biden administration plans to impose major new tariffs on electric vehicles, semiconductors, solar equipment and medical supplies imported from China, according to a U.S. official and another person familiar with the plan.
Tariffs on electric vehicles, in particular, could quadruple 鈥� from the existing 25 per cent to 100 per cent. The plan was described by the people on condition of anonymity because they were not authorized to provide details ahead of a formal announcement.
The tariffs, expected to be announced Tuesday, come as officials across the Democratic administration have expressed frustration over China's manufacturing 鈥渙vercapacity鈥� of EVs and other products that they say pose a threat to U.S. jobs and national security.
Industrialized nations including the United States and its European allies fear a wave of low-priced Chinese exports will overwhelm domestic manufacturing. On the U.S. side, there is particular concern that China鈥檚 green energy products will undermine massive climate-friendly investments made through the Democrats鈥� Inflation Reduction Act that President Joe Biden signed into law in August 2022.
The additional tariffs also carry some political heft going into the November presidential election. Both Biden and his presumptive Republican challenger, former President Donald Trump, have told voters that they'll be tough on China, the world's second largest economy after the United States and an emerging geopolitical rival.
Biden has defined his policy as 鈥渃ompetition with China, not conflict.鈥� He has embraced an industrial strategy that has used government financial support to pull in private investment in new factories and advanced technology, while limiting the selling of computer chips and other equipment to China.
Trump has floated the idea of levying massive tariffs against China in order to reduce the U.S. trade deficit with that country. He has repeatedly claimed that Biden's support for EVs would ultimately cause American factory jobs to go to China.
Tuesday's announcement is expected to keep in place some tariffs that were imposed during Trump's administration, covering about US$360 billion in Chinese goods. The new tax on imports would add products such as Chinese syringes and solar equipment.
There is the risk that tariffs could lead to a broader trade conflict between the two countries as they respond to each other's moves. China is seeking to create a technological edge and move up the economic chain.
There are some indications that China is cooling its production of lithium-ion batteries used in EVs, cell phones and other consumer electronics at a time when it is facing increasing criticism from the West.
On Wednesday, China鈥檚 Ministry of Industry and Information Technology issued a draft rule aimed at 鈥渟trengthening the management of the lithium-ion battery industry and promoting the sector鈥檚 high-quality growth.鈥�
The draft, which was posted on the ministry鈥檚 website for public input, says companies should be striving for better technological innovation, higher quality and lower costs, rather than expanding existing capacity.
Lithium battery plants built in restricted farmlands or industrial zones should be shut down, the draft says.
U.S. Trade Representative Katherine Tai is conducting a review of the Trump-era tariffs, and Republican lawmakers including House Ways and Means Committee Chair Jason Smith and Trade Subcommittee Chair Adrian Smith are urging a 鈥渟wift conclusion鈥� to the probe.
鈥淐ontinued inaction on the four year review poses serious risks for U.S. farmers, manufacturers, innovators, small businesses and workers," they wrote in a letter to Tai this week.
Meanwhile, Ohio Democratic Senator Sherrod Brown said in a tweet on Friday that 鈥淭ariffs are not enough. We need to ban Chinese EVs from the US. Period.鈥�
The Biden administration has also said it will investigate Chinese-made 鈥渟mart cars鈥� that can gather sensitive information about Americans driving them. The Commerce Department in February issued a notice of a proposed rulemaking that launches an investigation into national security risks posed by 鈥渃onnected vehicles鈥� from China and other countries considered hostile to the United States.
There currently are very few EVs from China in the U.S., but officials worry that low-priced models could soon start flooding the U.S. market, even with a 25 per cent tariff.
A car model launched last year by Chinese automaker BYD sells for around US$12,000 in China. The car鈥檚 craftsmanship rivals U.S.-made EVs that cost three or four times as much 鈥� and is stoking fear in the U.S. industry.
The Alliance for American Manufacturing 鈥� an alliance of businesses and the U.S. Steelworkers union 鈥� released a report in February that says the introduction of inexpensive Chinese autos to the American market 鈥渃ould end up being an extinction-level event for the U.S. auto sector.鈥� The U.S. auto sector accounts for 3 per cent of America鈥檚 GDP, according to the report.
Treasury Secretary Janet Yellen, who traveled to Guangzhou and Beijing in early April, cited the manufacturing of electric vehicles and their batteries as well as solar energy equipment 鈥� sectors that the U.S. administration is trying to promote domestically 鈥� as areas where Chinese government subsidies have driven rapid expansion of production.
鈥淐hina is now simply too large for the rest of the world to absorb this enormous capacity. Actions taken by the PRC today can shift world prices,鈥� she said during a speech delivered in Beijing in April, using the acronym for China鈥檚 official name, the People鈥檚 Republic of China.
鈥淎nd when the global market is flooded by artificially cheap Chinese products, the viability of American and other foreign firms is put into question.鈥�
The plan for new tariffs was reported earlier by Bloomberg News and The Wall Street Journal.
