Biden will raise tariffs on $18 billion in Chinese imports in new warning to Beijing

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CNN
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President Joe Biden is increasing tariffs on $18 billion in Chinese imports in a handful of sectors considered strategic to national security – an attempt to stall Beijing’s development of critical technologies and instead prioritize production from the USA.

The increases will apply to imported steel and aluminum, legacy semiconductors, electric vehicles, battery components, critical minerals, solar cells, cranes and medical products. The new tariffs – which range from 100% for electric vehicles, to 50% for solar components and 25% for all other sectors – will take place over the next two years.

“China is using the same playbook as before to boost its own growth at the expense of others,” said Lael Brainard, director of the White House National Economic Council. “China is simply too big to follow its own rules.”

In announcing the new tariffs during a Rose Garden speech on Tuesday, Biden said he seeks “fair competition with China, not conflict.”

“The fact is that American workers can work better and compete with anyone as long as the competition is fair,” Biden said. “For a long time, it wasn’t fair.”

Biden’s predecessor, former President Donald Trump, enacted a sweeping tariff program on $300 billion in Chinese imports during his administration, drawing authority from a provision in U.S. trade law that allows tariffs to be used to stifle competition that would threaten national security interests. That same trade law also requires that the effectiveness of such tariff programs be evaluated every four years, and the Biden administration’s decision is the result of that study. CNN previously reported on the upcoming changes.

White House officials said they also redesigned the program’s parameters to reflect the Biden administration’s policy priorities, particularly the transition to clean energy.

“China cannot be the only country producing clean technology for the world that we need,” said a senior administration official. “We need diversified, not concentrated, production of our most critical goods and technologies. … These are the kind of dynamics that we believe will produce resilient supply chains and clean technology.”

Electric vehicles imported from China will see their tariffs more than quadruple, from 27.5% to 100% – a policy lever intended to challenge Beijing’s practice of encouraging aggressively low prices by domestic electric vehicle manufacturers, while time imposing a 40% tariff on US automobile imports.

“We will not let China flood our market, making it impossible for American automakers to compete fairly,” Biden said Tuesday.

He added: “Guys, look, I am determined that the future of electric vehicles will be made in America by unionized workers, period.”

Chinese manufacturer BYD’s Seagull electric vehicle sells for around $10,000, a fraction of what rival American products cost.

“It was important to have a large enough increase in tariffs to ensure that we tried to level the playing field,” said a second senior administration official.

Beijing is known for introducing costly counterattacks. Chinese Foreign Ministry spokesman Wang Wenbin told reporters on Tuesday that China opposes “the unilateral imposition of tariffs that violate (World Trade Organization) rules and will take all necessary actions to protect their legitimate rights.”

After Trump revealed his sweeping tariff policy, China imposed tariffs on $101.4 billion in US exports, retaliation that the Brookings Institute estimated affected 294,000 US export-related jobs.

Biden acknowledged Tuesday that he expects China will likely retaliate in some way to the recently announced tariffs against Beijing.

“This is about saving American jobs,” Biden said in an interview with Yahoo Finance published Tuesday. “I’m sure China will talk a lot about this, but the fact is that China is already… well above its limits on this issue. I don’t think it will lead to any international conflict or anything like that, but I think they will probably try to figure out how they can raise tariffs, perhaps, on unrelated products.”

Responding to news of the impending tariffs, Trump, speaking outside the New York courthouse where he is on trial on Tuesday, suggested that Biden should have taken these steps at the beginning of his term.

“China is eating lunch right now,” Trump said outside the courtroom. Asked to respond to Trump’s statement after signing the tariffs, Biden said his predecessor “has been nurturing them for a long time.”

The White House declined to speculate on how Beijing might respond now. The authorities pointed out that parallel investigations carried out by partners in Europe, Brazil and Turkey reinforce their position.

“China is producing [goods] at a pace and with a trajectory that far exceeds any plausible estimate of global demand,” said the first senior administration official.

Treasury Secretary Janet Yellen and Secretary of State Antony Blinken raised this point with their Chinese counterparts during formal visits to the country in April. Administration officials discussed releasing the changes in April to set the stage for a tariff speech Biden delivered mid-month, but ultimately postponed it to preserve diplomatic visits, according to two sources familiar with the matter.

On April 17, Biden spoke at the United Steelworkers headquarters in Pittsburgh, calling for a tripling of tariffs that Trump imposed on certain steel and aluminum products imported from China, and for a new investigation into unfair shipbuilding practices. The Chinese government, Biden argued, is providing state money to Chinese steel companies to produce more steel than the economy demands, reducing the price and making it impossible for other companies to compete.

“They’re not competing,” Biden said of China. “They are cheating.”

It’s a message that resonates favorably with the so-called blue wall, the handful of states with strong industrial production in the Midwest that will be critical for either candidate during an election where commerce will once again play a prominent role.

Performance was less favorable across the Pacific, with China’s Ministry of Commerce accusing the US of “false accusations” and “wrong practices”.

In a separate executive order issued on Monday, Biden forced MineOne, a Chinese-backed cryptocurrency mining company, to sell its land near Francis E. Warren Air Force Base in Wyoming. The order states that MineOne’s proximity to the Air Force base increases risks to national security due to the company’s use of “specialized, foreign-sourced equipment potentially capable of facilitating surveillance and espionage activities.”

The decision comes amid recent attempts by Washington to limit the influence of Chinese companies over US consumers and national security, especially ahead of the 2024 presidential elections in November.

This story has been updated with additional information.

CNN’s Sam Fossum, Kathryn Monahan and Michael Williams contributed to this report.