E-cars, semiconductors, raw materials: USA significantly increases tariffs on goods from China

The US has announced extensive tariff increases on a wide range of Chinese products, including electric cars, batteries, chips and a number of raw materials. As the White House announced on Tuesday, the tariffs affect Chinese imports worth 18 billion dollars (16.7 billion euros). President Joe Biden's economic advisor, Lael Brainard, defended the high tariffs by saying that China is “financing its growth at the expense of others”.

The aim of the measures is to protect US companies and employees from unfair competition, the White House said. China must end its “unfair trade practices” in technology transfer, intellectual property and innovation. The measures are the result of a review of existing duties that date back to the trade dispute between the US and China under former President Donald Trump. At the time, Trump imposed tariffs on Chinese goods worth 300 billion dollars.

Now, some completely new duties are being introduced, and some existing duties are being drastically increased. The duty on Chinese electric cars will quadruple this year, from 25 to 100 percent. The duty on semiconductors is set to rise from the current 25 to 50 percent next year, and duties on solar cells will also rise from 25 to 50 percent. For steel and aluminum, 25 percent is planned instead of 7.5 percent, and new duties are being introduced on graphite and other minerals.

Beijing had already announced before the official announcement that it would respond with “all necessary measures”. China rejects unilateral tariff increases that violate the rules of the World Trade Organization (WTO), said Foreign Ministry spokesman Wang Wenbin. “This will significantly affect the atmosphere of bilateral cooperation,” the Ministry of Commerce later warned.

According to the White House, the tariff increases are intended to protect US industrial sectors of “strategic” importance. In August 2022, Biden, who is seeking another term in office in this year's elections, signed off on the multi-billion dollar Inflation Reduction Act subsidy program, which, among other things, provides around $370 billion for energy security and climate protection. This gigantic investment program for an ecological reorientation of the US economy includes the promotion of electric cars and renewables.

The tariffs on Chinese imports should now ensure that Biden's investments in jobs are not undercut by low-priced Chinese products, said economic adviser Brainard. She also criticized Trump's economic policies of the past few years: His administration had failed to stimulate investment and end the trade war with China. The promise to increase US exports to China, create jobs in the US and end China's “unfair practices” had not been fulfilled.

In assessing the announced tariffs, expert Paul Triolo from the consulting firm Albright Stonebridge Group said that the tariffs on electric cars were preventive in nature due to the already low import figures and were more of a “signal to the US automotive industry”. Due to the dominance of Chinese companies, the taxes on batteries would have greater consequences, he told the AFP news agency. Triolo also expects that China will now also respond with tariff increases.

The overcapacity of Chinese products is also a concern for the European Union. This mainly concerns electric cars from up-and-coming Chinese manufacturers. At the end of 2023, the EU Commission launched a competition investigation against China over alleged illegal subsidies for car manufacturers. If this shows that Beijing is violating international trade law, Brussels could impose punitive tariffs on Chinese vehicles.