The Biden administration announced tariffs on Chinese goods such as electric vehicles, and the Ministry of Foreign Affairs responded

CBN

2024-05-14 19:43Posted on the official account of Shanghai Yicai

On the 14th, the White House issued a statement saying that the Biden administration announced a new tariff rate on $18 billion worth of Chinese imports.

Specifically, from this year, the United States will impose a fourfold tariff on imported Chinese electric vehicles, from 25% to 100%. Doubling the import tax on Chinese solar cells from 25% to 50%. Tariffs on some Chinese steel and aluminum imports will more than triple, from the current 7.5% to 25%.

At the same time, the Biden administration has also instructed U.S. Trade Representative Katherine Tai to more than triple tariff rates on lithium-ion batteries used in electric vehicles and lithium batteries used for other purposes. In addition, tariffs on imports of Chinese semiconductors will jump from 25% to 50% starting in 2025.

In the fact sheet, the White House said tariffs would be imposed for the first time on Chinese imports of medical needles and syringes, as well as large ship-to-shore cranes; China's rubber medical gloves, some respirators and masks will also be subject to higher tariffs.

According to the global network, at the press conference of the Ministry of Foreign Affairs on May 14, a reporter asked that US President Biden will announce on Tuesday tariffs on products from China, which are aimed at China's electric vehicles, as well as medical supplies and solar products, Chinese Foreign Ministry spokesman Wang Wenbin said that China has always opposed violating WTO rules and unilateral tariffs, and China will take all necessary measures to safeguard its legitimate rights and interests.

Sun Lei, a senior partner at Dentons, said in an interview with the first financial reporter that the US is suspected of violating the WTO agreement.

Sun Lei explained, first of all, if this tariff is only levied on China, this practice violates the WTO's most-favored-nation principle, which stipulates that all WTO members should be given the same most-favored-nation trade treatment; Second, the tariffs that have been negotiated and promised to be reduced by WTO members cannot be arbitrarily increased, so this practice also violates the tariff concession commitments made by the United States at the WTO.

What areas are involved

White House national economic adviser Lael Brainard said the purpose of the tariffs is to ensure that the new manufacturing jobs created by Biden's legislative measures (such as the Inflation Reduction Act, the CHIPS and Science Act, and the Infrastructure Act) are not "weakened" by China's massive exports, including electric vehicles, batteries, critical medical devices, steel and aluminum, semiconductors and solar energy.

According to the White House statement, under Section 301, tariff rates on certain steel and aluminum products will increase from 0-7.5% to 25% in 2024. According to the White House, steel is an important sector of the U.S. economy, and recently, the Biden administration announced a $6 billion investment in 33 cleaner production projects, including steel and aluminum.

In the field of semiconductors, the Biden administration has decided to increase the tariff rate on semiconductors from 25% to 50% in China by 2025. In the field of electric vehicles, the tariff rate on electric vehicles will increase from 25% to 100% in 2024. In the field of solar cells, in 2024, the tariff rate on solar cells, whether assembled into modules or not, will increase from 25% to 50%.

In terms of batteries, battery components and critical minerals, the tariff rate on lithium-ion electric vehicle batteries will increase from 7.5% to 25% in 2024; In 2026, the tariff rate on lithium-ion non-electric vehicle batteries will increase from 7.5% to 25%. The tariff rate on battery components will increase from 7.5% to 25% in 2024. The tariff rate on natural graphite and permanent magnets will increase from zero to 25% in 2026. Tariff rates on certain other critical minerals will increase from zero to 25% in 2024.

In addition, in 2024, the tariff rate for ship-to-shore cranes will increase from 0% to 25%. In the field of medical supplies, the tariff rate on syringes and needles will be increased from 0% to 50% in 2024. For certain personal protective equipment (PPE), including certain respirators and masks, the tariff rate will increase from 0-7.5% to 25% in 2024. In 2026, tariffs on rubber medical and surgical gloves will increase from 7.5% to 25%.

How Chinese automakers are coping

What needs to be seen is that the Biden administration's potential measures this time are not so much to suppress the segment as to stem the expected increase in imports: China's steel, aluminum and automobiles currently account for only a small fraction of the U.S. supply.

According to the Center for Strategic and International Studies (CSIS), a U.S. think tank, more than 80 percent of solar panel production is currently in China, and the cost of producing a panel in China is 60 percent cheaper than in the United States.

Sun Lei also told the first financial reporter that at present, China's electric vehicles account for a small market share in the United States, and the pain of increasing tariffs at this initial stage will be smaller. The U.S. logic is that without intervention, China's EVs will inevitably increase their market share in the U.S., and the cost of intervening after becoming dependent on China's supply chain will be greater.

It is worth noting that many economic advisers in the Biden administration are still divided on whether to adjust the Trump-era tariffs. U.S. Trade Representative Katherine Tai advocated for tariffs to be raised, and the U.S. should take "early action, decisive action" to protect the U.S. electric vehicle industry from China. Others, such as Treasury Secretary Janet Yellen, have called for tariffs on consumer goods to be lowered while focusing them on strategic sectors.

In this regard, Sun Lei said that if the tariffs on electric vehicles in China are a fact, it will have a greater impact on Tesla and other car companies that invest in building factories in China in the short term. In the case of Tesla, for example, if tariffs are imposed, cars currently produced in China will only be sold in China or other markets other than the United States, which will lead to higher fixed costs for car companies. But Tesla's gigafactories in Germany and other countries can absorb and adjust to this change.

Sun Lei said that for Chinese enterprises, the pressure to consider transferring investment will be greater, and the pace of decision-making will be accelerated. Moreover, this change is not only affecting the electric vehicle industry. Due to the very long supply chain of automotive products, the relocation of vehicle assembly and production to other countries may also affect the entire supply chain, including steel and aluminum, engine technology, lithium batteries, etc.

(This article is from Yicai)

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