USA increases tariffs on electric cars and more products from China

Tariffs of 25 percent already apply to electric cars from China in the USA. Soon this will be 100 percent. The White House is accusing China of unfair competition in other sectors as well and is taking action.

US President Joe Biden is blocking the entry of electric cars from China into the US with special tariffs of 100 percent. The US government is also imposing new or significantly increased tariffs on solar cells, semiconductors, port cranes and medical items such as cannulas and protective masks. China is flooding the global markets with artificially cheap exports, the US government said in its announcement on Tuesday. At the same time, the measures are limited to a few strategically important areas.

Biden is striving for a stable relationship with China, the director of the White House National Economic Council, Lael Brainard, assured journalists. She did not want to speculate on possible retaliatory measures from Beijing. According to the US government, imports from China worth 18 billion dollars are affected by the new measures.

USA: Chinese electric car exports endanger investments

Chinese electric cars were already subject to tariffs of 25 percent in the US, which – unlike in Europe – kept them off the market. Chinese manufacturers were receiving unfair subsidies and could therefore distort competition with cheap vehicles, said Biden's economic advisor Brainard. Chinese electric car exports increased by 70 percent in 2023 – and that endangers investments in other countries, argues the US government. “The president will not allow that here,” said Brainard. Tesla boss Elon Musk, among others, warned earlier this year about the dominance of Chinese manufacturers: “If there are no trade barriers, they will pretty much destroy most of the other car companies in the world.”

Biden saw in his hometown of Scranton, Pennsylvania, what happens when production moves to other countries, said the trade representative. That's why he wants to ensure fair competition. Biden, who is running for re-election in November, spent tens of billions on investments in the chip industry, infrastructure and manufacturing, among other things, during his term in office. Biden's predecessor, Donald Trump, had already imposed tariffs on imports from China.

The other special tariffs for Chinese products in detail:

  • Solar cells: Tariffs are rising from 25 to 50 percent this year. Chinese production capacity in this area is on track to be twice as high as the global demand expected in the short term, warned Brainard. This is also due to unfair practices. In every production step, China controls more than 70 percent of global capacity – and this endangers security of supply. In Germany, the Swiss solar company Meyer Burger closed its production site in Saxony, citing price pressure from the Far East.
  • Harbour cranes: New tariffs of 25 percent are being imposed on the large machines that load and unload ships. The US government wants to build more port cranes in its own country again. Last year there were also warnings that the technology built in China could pose a risk of espionage or sabotage.
  • Medical devices: A new tariff of 50 percent will be introduced for syringes and needles. For some protective masks, the tariffs will rise from the current maximum of 7.5 percent to 25 percent. For medical gloves, the increase from 7.5 to 25 percent will be postponed until 2026.
  • semiconductor: Tariffs are set to rise from 25 to 50 percent by 2025. China may not be supplying the USA with the most modern chips, but it does supply semiconductor technology from older production processes that are used in cars and household appliances, for example. At the same time, Biden is investing $39 billion to subsidize new chip factories in the USA. This is also seen as a question of national security.
  • Steel and aluminum: Tariffs for some metal products are rising from 7.6 to 25 percent. Brainard pointed out, among other things, that the Chinese steel industry relies on production processes with higher CO2 emissions, while American manufacturers are investing in more climate-friendly technologies.
  • Batteries: Tariffs on lithium-ion batteries for electric cars are set to rise from 7.5 to 25 percent this year. For batteries used in other technologies, the increase will be postponed until 2026. There are also tariffs of 25 percent for some electronic components such as magnets.

China defends itself against criticism

China has repeatedly complained about the US's economic coercive measures. Instead of correcting the tariffs under former President Donald Trump, which the WTO deemed a violation, the US has continued to politicize economic and trade issues, said Chinese Foreign Ministry spokesman Lin Jian recently. Beijing will take all necessary measures to defend its interests.

China denies that its economic policy is promoting surplus. “The so-called problem of Chinese overcapacity does not exist, neither from the perspective of comparative advantage nor in light of global demand,” stressed China's head of state and party leader Xi Jinping recently in France during his visit to Europe. Instead, the People's Republic argues that its “green energy” industry has reduced global inflationary pressure and contributed to the fight against climate change. US ministers have already criticized Chinese economic practices during previous visits to China.