Biden Administration Set to Impose New Tariffs on Strategic Sectors in Response to Unfair Economic Practices by China

The upcoming decision by President Joe Biden’s administration regarding China tariffs is expected to involve the imposition of new, elevated tariffs on key strategic sectors such as electric vehicles (EVs), batteries, and solar cells, while existing tariffs will be largely maintained. This move, anticipated as early as next week, is part of Biden’s economic race with China and builds upon his previously announced calls to increase tariffs on Chinese steel and aluminum, as well as initiate a fresh probe into China’s shipbuilding industry. While a final decision could still be delayed, this represents one of Biden’s most significant actions towards China. The yuan weakened following news of the potential tariffs, and China has warned against the restrictions, stating that they seriously disrupt economic and trade relations between the two nations. However, analysts suggest that many green-tech brands, such as battery manufacturer Contemporary Amperex Technology Co. Ltd., already have limited exposure to the US market. The move is being compared to similar actions taken by former President Donald Trump, who has threatened to hike tariffs on all Chinese imports should he be reelected. The Biden administration has emphasized the need to address unfair economic practices and industrial overcapacity in China, with Biden stating that he is not looking for a fight with China, but rather fair competition. However, the move has raised concerns among investors, as they contemplate the impact on stocks that may be exposed to these affected sectors. The EU has recently launched an investigation into EV subsidies, which may result in additional tariffs by July. As both the US and EU criticize China’s state support, which they believe fuels a deluge of cheap exports that threaten jobs in their markets, the situation remains complex. Despite the impact of the tariffs on Chinese firms being minimal due to their avoidance of the US market, US Senator Chuck Grassley anticipates that Beijing will respond with further tariffs, particularly on agricultural exports.