Washington: With the stated objective of protecting American workers and businesses from “unfair Chinese trade practices”, the US increased tariffs on the import of steel and aluminium, semiconductors, electric vehicles, battery, battery components and critical minerals, solar cells, ship to shore cranes and medical products from China on Tuesday.
The move marked the bipartisan nature of the trade war that had commenced under Donald Trump’s presidency and has continued under Joe Biden administration against China. The new tariffs, imposed under Section 301 of Trade Act of 1974, will affect $18 billion of imports and appear motivated by both Biden’s electoral considerations — there is now a political consensus that China’s economic policies have “stolen” jobs — as well as American concerns over China’s dominance in strategic sectors at a time when great power rivalry has permeated across new tech and green sectors.
A factsheet released by the White House on Tuesday said that China’s “unfair trade practices concerning technology transfer, intellectual property, and innovation” hurt America and accused China of “flooding global markets with artificially low-priced exports”.
“China’s forced technology transfers and intellectual property theft have contributed to its control of 70, 80, and even 90% of global production for the critical inputs necessary for our technologies, infrastructure, energy, and health care—creating unacceptable risks to America’s supply chains and economic security. Furthermore, these same non-market policies and practices contribute to China’s growing overcapacity and export surges that threaten to significantly harm American workers, businesses, and communities,” the White House said.
It said that the new tariffs were aimed at precisely those sectors where the US has made its own investments through a set of legislations in recent years to boost domestic production, and distinguished these measures from Republican demands as well as Trump’s possible move to impose a ten percent tariff on imports across the board from all countries if re-elected to power. Officials are confident that the limited scale of the tariffs and the fact that it will be phased out means that they won’t have an inflationary impact.
On steel and aluminium, the US increased tariffs from 0-7.5% to 25% this year, saying that China’s “non-market overcapacity, which are among the most carbon-intensive” posed unfair competition. “China’s policies and subsidies for their domestic steel and aluminium industries mean high-quality, low-emissions US products are undercut by artificially low-priced Chinese alternatives produced with higher emissions.” These tariffs are widely seen as aimed at domestic workers in swing states such as Pennsylvania and Michigan.
On semiconductors, a critical strategic sector and the heart of today’s geopolitical competition, the US will increase tariffs from 25% to 50% by 2025. The White House said that China’s policies in the sector had led to “growing market share and rapid capacity expansion that risks driving out investment by market-driven firms”. In the next three to five years, China will account for half the new capacity that’s coming online to produce certain legacy semiconductor wafers, the US warned. The White House also alluded to the supply chain disruptions, including in legacy chips, during the pandemic that had led to price spikes across automobiles, medical devices and consumer appliances and the need to reduce over-reliance on a few markets. The US has passed its own Chips Act to boost semiconductor manufacturing through a $53 billion investment.
As China’s share in the global EV market increases, the US has increased tariff rates from 25% to 100% in 2024. “With extensive subsidies and non-market practices leading to substantial risks of overcapacity, China’s exports of EVs grew by 70% from 2022 to 2023,” the White House said, claiming that the enhanced tariff will protect American manufacturers.
In addition, the US has announced an increase in the tariff rate on lithium-ion EV batteries from 7.5% to 25% in 2024; on lithium-ion non-EV batteries from 7.5% to 25% in 2026; on battery parts from 7.5% to 25% in 2024; on natural graphite and permanent magnets from zero to 25% in 2026; and on certain other critical minerals from zero to 25% in 2024. “China currently controls over 80% of certain segments of the EV battery supply chain, particularly upstream nodes such as critical minerals mining, processing, and refining. Concentration of critical minerals mining and refining capacity in China leaves our supply chains vulnerable and our national security and clean energy goals at risk,” the White House said offering a justification for its move.
The US also increased the tariff rate on solar cells from 25% to 50% in 2024 to “protect against China’s policy-driven overcapacity that depresses prices and inhibits the development of solar capacity outside of China”. The White House said that China has used unfair practices to “dominate upwards of 80 to 90% of certain parts of the global solar supply chain” and is “flooding” global markets with artificially cheap solar modules and panels, undermining investment in solar manufacturing outside of China.
The US has also increased tariff rate on ship-to-shore cranes from 0 to 25% in 2024, to “protect US manufacturers from China’s unfair trade practices that have led to excessive concentration in the market”.
And finally, in the domain of medical devices, the US has increased tariff rates on syringes and needles from 0% to 50% in 2024; on certain personal protective equipments, including respirators and face masks, from 0-7.5% to 25% this year; and on rubber medical and surgical gloves from 7.5% to 25% in 2026. “American businesses are now struggling to compete with underpriced Chinese-made supplies dumped on the market, sometimes of such poor quality that they may raise safety concerns for health care workers and patients.”