Biden announces sweeping tariffs on Chinese chips and electric vehicles
US President Joe Biden is increasing customs duties on products imported from China across a wide range of areas, including semiconductors, batteries, solar cells and critical minerals, in order to support domestic production.
Biden announced comprehensive tariffs on Chinese chips and electric vehicles.
The US will also increase tariffs on port cranes and medical products, in addition to previously imposed increases on steel, aluminum and electric vehicles. The changes are projected to affect about $18 billion of current annual imports, the White House said.
Within the scope of the decision, none of the customs duties previously imposed by former US President Donald Trump were reduced. In addition, Biden has chosen to increase tariffs in critical sectors such as chip and green energy.
Still, Biden needs to strike a careful balance in an election year. Additional tariffs could increase price pressure on consumers already hurt by inflation. This move could also lead to retaliation from China.
The changes are phased in, taking effect from 2024 to 2026. The tariffs also took a more targeted approach, rather than the comprehensive tariffs planned by Trump.
The biggest increase was seen in electric vehicles, where tariffs quadrupled, while in some sectors tariffs doubled and in others tariffs were applied for the first time.
Biden will officially announce the measures at an event to be held at the White House on Tuesday. Officials said the newly announced tariffs were imposed to balance competition with China to support domestic investments envisioned in the bipartisan infrastructure bill and the Chips and Science Act.
Tariffs will in some cases be applied to areas where China has only a small portion of the U.S. market, but these steps are also aimed at curbing potential import growth.
“China is too big to play by its own rules,” National Economic Council Director Lael Brainard told reporters. “By continuing to invest despite overcapacity and flooding global markets with low-priced products due to unfair economic practices, China is using the same tactics it has used before to fuel its own growth at the expense of others,” he said.
Within the scope of the decision, the tariff on semiconductors will be increased from 25 percent to 50 percent by 2025. The sector in question is at the center of Biden’s industrial strategy, where he implements billions of dollars of support to increase US-based production.
While a new 25 percent tariff will be applied to some critical minerals this year, this rate will also be applied to natural graphite and permanent magnets in 2026. Ship-to-shore cranes will also face a new 25 percent tariff this year.
The electric vehicle tariff will come into force this year and the final tariff rate, currently 27.5 percent, will increase to 102.5 percent. Customs duties on some steel and aluminum from China, which currently impose 0 percent or 7.5 percent tariffs, will also rise to 25 percent this year.
Tariffs on lithium-ion batteries and battery parts for electric vehicles will increase from 7.5 percent to 25 percent this year, while the same rate will be applied on lithium-ion batteries not associated with electric vehicles in 2026. Solar cell tariffs will increase from 25 percent to 50 percent this year.