US To Introduce New Tariffs On China, Targeting Electric Vehicles And Strategic Sectors

The US government is gearing up to announce a significant decision on China tariffs, anticipated to be revealed as early as next week.

This decision marks the culmination of a comprehensive review of Section 301 tariffs, initially implemented under the Donald Trump administration in 2018.

The forthcoming tariffs are expected to focus on crucial strategic sectors, including electric vehicles, batteries, and solar cells, while largely maintaining existing levies.

While there remains a possibility of a delay, this move underscores one of President Joe Biden's major steps in the economic competition with China. It builds upon his recent call to increase tariffs on Chinese steel and aluminium, coupled with the launch of a formal investigation into China's shipbuilding industry.

Chinese President Xi Jinping's strategy of boosting manufacturing to address domestic economic challenges has raised concerns internationally. US and European Union leaders have cautioned Beijing about the ramifications of excessive state subsidies, which have led to a surge in low-cost exports, posing threats to jobs in their respective markets.

President Biden emphasised the US stance against China's "unfair economic practices and industrial overcapacity" last month, asserting his preference for fair competition rather than confrontation.

Both Biden and Trump are vying to demonstrate their toughness on China, particularly as they approach the anticipated rematch in the November election.

Trump has pledged to escalate tariffs on all Chinese imports if re-elected, proposing a 60 per cent tax rate. However, this approach has faced scepticism from many Democrats due to concerns about potential price hikes for US consumers already grappling with inflation.

During Trump's tenure, the US and China engaged in a trade war, characterised by retaliatory tariffs targeting agricultural exports from America.

US Senator Chuck Grassley from Iowa anticipates China's response to Biden's announcement, recalling how China retaliated against Trump's tariffs, particularly by targeting agricultural products.

The impending announcement by President Biden would be officially enacted by the office of US Trade Representative Katherine Tai.

The review of tariffs, initiated in 2022, is expected to conclude soon, as indicated by Tai in a recent interview. The administration has been exploring ways to strategically enhance the effectiveness of tariffs.

This decision follows Biden's proposal last month for new tariffs on Chinese steel and aluminium, aiming to bolster the American steel sector amid an election year. However, the impact of these proposed tariffs is viewed as symbolic, given China's minimal exports of these metals to the US, reports Economic Times.

The existing array of tariffs encompasses imports ranging from industrial inputs to consumer goods, initially imposed by Trump in 2018 under Section 301 of the Trade Act of 1974.

Internal divisions within the Biden administration had previously hindered consensus on tariff policies. While some officials advocated for easing restrictions on household items to alleviate US inflation, a formal review of the tariffs' impact was initiated by USTR in late 2022, as mandated by law.

The forthcoming tariff move by Biden comes at a time when the US-China relationship has shown signs of stabilisation amidst diplomatic engagements. Following a meeting between the two leaders in California last November, Biden noted "real progress" in the bilateral relationship.