CHINA WATCHU.S.-China Trade War: Why Joe Biden Has Raised the Stakes

By Uwe Hessler

Published 14 May 2024

In a move to safeguard domestic industries and address unfair trade practices, the US president has quadrupled tariffs on Chinese electric vehicles and raised levies on other green tech.

In a move that is likely to inflame trade tensions between the world’s two biggest economies, the Biden administration announced on Tuesday it was imposing more stringent curbs on Chinese imports worth $18 billion (€16.67 billion).

After nearly four years of review, Washington will hike tariffs in targeted sectors, with Chinese electric vehicles (EVs) bearing the brunt of the increase. The total tariff on these vehicles will skyrocket to 102.5% from the current 27.5%.

The new measures also target other technologies including batteries, solar cells, steel, and aluminum. Levies will rise from 7.5% to 25% on lithium batteries, from zero to 25% on critical minerals, from 25% to 50% on solar cells, and from 25% to 50% on semiconductors.

Biden has previously announced steel and aluminum tariffs, which will increase to 25% on some products that have a 7.5% rate or no tariffs now.

The action is aimed at encouraging China to “eliminate its unfair trade practices regarding technology transfer, intellectual property, and innovation,” the White House said in a statement.

The EV rate aims to protect the US from a potential flood of Chinese cars that could upend the politically sensitive auto industry. 

Biden’s team has meticulously finalized the measures, balancing the need for protectionism with considerations for sustaining economic growth. 

The new tariffs will begin after 90 days from Tuesday — a period that will be closely watched for signs of tit-for-tat retaliation by China. 

How Effective Will the Measures Be?
Chinese EVs were virtually locked out of the US market years ago by existing tariffs, while Chinese solar firms mostly export to the US from overseas, avoiding similar curbs.

The Biden administration has been “focused on sectors of longstanding concern,” said Greta Peisch from law firm Wiley Rein LLP who served until January as the top trade lawyer for the US Trade Representative’s office.

These are calculated to address particular activities and risks and avoid escalation, to maintain the relationship with China that we have” outside those key goods, she told news agency Bloomberg.

So, despite the somewhat symbolic nature of Biden’s measures, particularly given China’s limited reliance on US consumers for targeted sectors, the move underscores broader concerns about China’s economic influence and unfair trade practices.

Washington aims to protect key US sectors like electric vehicles, batteries, and solar cells from a potential flood of Chinese imports, which could disrupt sensitive industries and undermine US economic interests.