The Biden administration is planning to impose major new tariffs on electric vehicles, semiconductors, solar equipment, and medical supplies imported from China, according to sources familiar with the plan. The tariffs, which are expected to be announced Tuesday, come as officials across the Democratic administration have expressed frustration over China’s manufacturing “overcapacity” of EVs and other products that they say pose a threat to U.S. jobs and national security.
Industrialized nations including the United States and its European allies fear a wave of low-priced Chinese exports will overwhelm domestic manufacturing. On the U.S. side, there is particular concern that China’s green energy products will undermine massive climate-friendly investments made through the Democrats’ Inflation Reduction Act that President Joe Biden signed into law in August 2022.
Biden has defined his policy as “competition with China, not conflict.” He has embraced an industrial strategy that has used government financial support to pull in private investment in new factories and advanced technology, while limiting the selling of computer chips and other equipment to China.
The additional tariffs also carry some political heft going into the November presidential election. Both Biden and his presumptive Republican challenger, former President Donald Trump, have told voters that they’ll be tough on China, the world’s second largest economy after the United States and an emerging geopolitical rival.
Tuesday’s announcement is expected to keep in place some tariffs that were imposed during Trump’s administration, covering about $360 billion in Chinese goods. The new tax on imports would add products such as Chinese syringes and solar equipment.
There is the risk that tariffs could lead to a broader trade conflict between the two countries as they respond to each other’s moves. China is seeking to create a technological edge and move up the economic chain.
The Biden administration has also said it will investigate Chinese-made “smart cars” that can gather sensitive information about Americans driving them. The Commerce Department in February issued a notice of a proposed rulemaking that launches an investigation into national security risks posed by “connected vehicles” from China and other countries considered hostile to the United States.
There currently are very few EVs from China in the U.S., but officials worry that low-priced models could soon start flooding the U.S. market, even with a 25% tariff. A car model launched last year by Chinese automaker BYD sells for around $12,000 in China. The car’s craftsmanship rivals U.S.-made EVs that cost three or four times as much — and is stoking fear in the U.S. industry.
The Alliance for American Manufacturing — an alliance of businesses and the U.S. Steelworkers union — released a report in February that says the introduction of inexpensive Chinese autos to the American market “could end up being an extinction-level event for the U.S. auto sector.” The U.S. auto sector accounts for 3% of America’s GDP, according to the report.
