May 18, 2024

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Biden hits Chinese electric cars and solar cells with higher tariffs

Biden hits Chinese electric cars and solar cells with higher tariffs

  • Written by Natalie Sherman
  • Business Correspondent, New York

Image source, Getty Images

US President Joe Biden is ramping up tariffs on Chinese-made electric cars, solar panels, steel and other goods.

The White House said the measures, which include a 100% border tax on electric cars coming from China, were a response to unfair policies and aimed to protect American jobs.

China said it opposes these increases and will take retaliatory measures.

Analysts said the tariffs were largely symbolic and aimed at shoring up votes in a difficult election year.

These protests come months after former President Donald Trump, who is running for the White House against Biden, criticized and said that his rival’s support for electric cars would “kill” the American auto industry..

Biden pledged on Tuesday that he would not allow China to “unfairly control the market” for electric cars and other key goods, including batteries, computer chips and essential medical supplies.

“If the pandemic has taught us anything, it’s that we need a safe supply of essentials right here at home,” he said.

The White House said the tariffs announced on Tuesday would affect imports worth about $18 billion.

In addition to increasing customs duties on electric cars from 25% to 100%, duties on solar cells will rise from 25% to 50%.

Customs tariff rates on some steel and aluminum products will more than triple to 25%, from 7.5% or less.

In response, the Chinese Ministry of Commerce said that the new moves “will severely affect the atmosphere of bilateral cooperation,” and criticized what it described as the politicization of economic issues.

These moves expand the sweeping border taxes the United States imposed on Chinese goods under Trump, citing unfair trade practices.

During the Biden administration’s review of the procedures, the government received nearly 1,500 comments, The vast majority of them From business owners who claim they are raising prices for ordinary Americans, and are demanding their removal.

Biden’s decision to leave tariffs in place and expand them to new areas — even as persistent U.S. inflation weighs on his approval ratings — is a testament to the dramatic shift in trade views of both U.S. political parties, which have long championed it. Benefits of global trade.

Wendy Cutler, a former US trade official who is now vice president of the Asia Community Policy Institute, said she believes Americans are willing to accept higher-priced cars in exchange for helping to protect American companies and jobs.

“We’ve seen this movie before — with solar, with steel, and… [aluminium]“When it comes to cars and other products, the United States needs to get ahead of the curve.”

“It’s all about trade-offs and cars may get more expensive in the near term but in the long term we want to have a competitive industry here.”

Image source, Getty Images

At a press conference, White House officials denied that domestic politics influenced the decision.

They said Beijing has shown no sign of moving away from practices that hurt the United States, including rules that force Western companies to share information with the aim of stealing it and subsidies that put companies in a position to pump out products far in excess of expected demand.

“They are flooding the market,” Biden said. “It’s not a competition, it’s cheating.”

The former president, who once called himself the “Tariff Man,” campaigned on a proposed sweeping 10% tariff on foreign imports, which could jump to 60% on goods from China.

He also attacked Biden for promoting electric cars, a move he said would devastate American auto companies, major employers in states like Michigan that will be key election battlegrounds in November.

Erika York, chief economist at the Tax Foundation, said both candidates are “on the same path” of raising barriers to trade and looking inward “rather than looking at what we can do on the policy front that will make our sectors more competitive.” “. “.

She said the administration’s promotion of tariffs as a strategy was “a euphemism for protecting sectors that are politically important to this administration.”

“It’s about political economy calculations and not what makes the most economic sense or what is most affordable for consumers in the United States.”

The United States already imposes heavy tariffs on electric cars made in China, which has made sales of such cars very small.

But Washington is cautiously monitoring the increase in sales of Chinese companies in Europe and other countries.

Ensuring that no single country dominates green technologies is critical to making the transition successful and sustainable in the long term, White House officials said.

Natasha Ibtihaj of Artemis Investment Management said that while moves targeting electric vehicles are likely to have little practical impact, the business world is waiting to see whether Europe will take similar steps.

New definitions – at a glance

The European Union and the United Kingdom are among other places discussing moves to limit imports of Chinese-made electric vehicles, even at the risk of slowing their adoption.

“It’s not really a surprise to Chinese investors or companies, especially in the run-up to the election where neither candidate is really pro-China,” she said.

“Given the relatively small volume of imports into the US, what happens next in Europe is perhaps more interesting.”

The United States and China have been locked in a trade war since 2018, when Trump imposed tariffs on about two-thirds of goods imported from China, valued at about $360 billion at the time.

These actions sparked retaliation from Beijing, a confrontation that ended in detente in early 2020 when Trump reduced the rate of some tariffs, while China pledged to boost its purchases from the United States.

Those promises were not fulfilled, but the tariffs have since paid off More than $200 billion according to the United States In imposing new border taxes on the United States government, while significantly modifying global trade patterns.

Most of this was paid by ordinary Americans in the form of higher prices for furniture, shoes and other goods.

However, in a research note, Oxford Economics described the latest plans as “more of a symbolic bark than a bite.”

The company said it was likely to lift inflation by a negligible 0.01 percentage point, while affecting growth in a similar way, and described the effect as a “rounding error.”

Reports contributed by World Business Report Radio