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US sharply raises tariffs on Chinese EVs and semiconductor imports

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The Biden administration is sharply increasing tariffs on imports from China including electric vehicles, batteries and semiconductors in an effort to protect US jobs ahead of the election in November.

The White House said the action was “carefully targeted at strategic sectors” including aluminium and steel, critical minerals, solar cells, port cranes and medical products. The tariffs would apply to $18bn worth of Chinese products, it said.

The move follows a multiyear review of tariffs on $300bn worth of Chinese goods imposed by then-president Donald Trump as part of his trade war with China. US officials said the administration of President Joe Biden had decided to largely keep the other Trump tariffs in place.

Lael Brainard, the White House national economic adviser, said the action would “make sure that historic investments in jobs spurred by President Biden’s actions are not undercut by a flood of unfairly underpriced exports from China”.

She added: “China’s using the same playbook it has before to power its own growth at the expense of others by continuing to invest despite excess Chinese capacity and flooding global markets with exports that are underpriced due to unfair practices.”

The US will quadruple the tariff rate on Chinese EVs to 100 per cent this year and roughly triple the rate on imports of steel and aluminium. The rate on Chinese semiconductors will be doubled from 2025. The tariff on solar cells will also be doubled this year to 50 per cent.

Washington will also more than triple tariffs on Chinese lithium-ion EV batteries to 25 per cent this year. It will take a similar action for lithium-ion batteries for non-electric vehicles from 2026 — a move officials said was designed to give US companies more time to develop the technology.

Speaking to reporters in advance of the announcement, senior US officials denied the move was connected to the presidential election. “This has nothing to do with politics,” one official said.

But Biden has taken other actions in recent months that appear designed to shore up votes among union workers to help him win in Pennsylvania, a critical industrial battleground, and other swing states such as Michigan, home to many of the country’s carmakers. Biden has come out in opposition to the Japanese group Nippon Steel’s proposed acquisition of US Steel despite Tokyo being the most important US ally in the Indo-Pacific region.

The US officials said the sectors targeted were the same areas Biden had prioritised for development through legislation including the Chips Act and the Inflation Reduction Act.

One official said the US was not trying to “undercut” China’s development or hurt efforts that Washington and Beijing have taken to stabilise relations since Biden met Chinese President Xi Jinping for a summit in November.

But the official said China was producing at a rate “far in excess of any plausible estimate of global demand” which would flood global markets and undercut the US’s ability to build productive capacity.

“That reduces our supply chain resilience, that leaves all of us across the world more vulnerable to economic coercion,” he added.

Following media reports last week that Biden would increase the tariffs, Beijing said Washington was trying to “smear and suppress” China’s economy.

On Tuesday, Chinese foreign ministry spokesperson Wang Wenbin said that “China consistently opposes unilateral tariff increases that violate WTO [World Trade Organization] rules and will take all necessary measures to safeguard its legitimate rights and interests”.

The US imports very few EVs from China. But Greta Peisch, who until recently served as general counsel in the Office of the US Trade Representative, said raising tariffs on the vehicles was an important step to ensure US companies would be able to compete in the future.

“Our companies are making the investments into new technologies, into electric vehicle production, into battery factories [so] to maintain those investments you have to have some certainty that there’s going to be a level playing field in the future,” said Peisch, who is now at the law firm of Wiley.

“Having our companies know their investments are not going to be undermined by an influx of imports from China in one or two or however many years is really important,” she said.

China is facing pressure on multiple fronts. The European Commission is also investigating EV imports from China and is expected to increase tariffs in the coming months.

Additional reporting by Edward White in Shanghai, Kana Inagaki in Tokyo and Wenjie Ding in Beijing

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