(Bloomberg) — President Joe Biden’s administration is poised to announce a sweeping decision on tariffs on China as early as next week, a decision that would reject the sweeping tariff increases sought by President Donald Trump. Meanwhile, it is expected that new tariffs will be imposed targeting key strategic areas. A person familiar with the matter said.
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The decision marks the culmination of a review of the Section 301 tariffs first introduced under the Trump administration in 2018. The US will impose new high tariffs focused on key industries such as electric vehicles, batteries and solar cells. Other existing taxes on China are also expected to largely remain in place. An announcement is expected on Tuesday, two people familiar with the matter said.
While the decision could be delayed, it still represents one of Biden’s biggest moves in the economic race against China. This follows last month’s call for higher tariffs on Chinese steel and aluminum, as well as the formal launch of a new investigation into China’s shipbuilding industry.
The yuan fell on the news, and the CSI300 index of Chinese stocks fell as much as 0.6% in early trading, but has since rebounded.
“This will definitely cause investors to pause on stocks that are potentially at risk,” said Xin Yao Ng, investment director at ABRDN. He added that many green technology brands, such as Amperex Technology, already have investment restrictions. US exposure. “We all know it’s a risk.”
Read more: Chinese investors brace for impact from US tariff plans
The full scope of the upcoming tariffs, including fees and the full list of affected sectors, is not clear. The White House declined to comment. Additionally, although no large-scale reductions are expected, it is unclear in what areas tariffs may be reduced, if at all.
China’s Foreign Ministry said the tariffs imposed by the previous US administration had “severely disrupted” economic and trade exchanges between the two countries. The paper called on the United States to lift the restrictions, adding that China would take steps to protect its rights and interests.
“Instead of correcting its wrong practices, the United States continued to politicize economic and trade issues,” ministry spokesman Lin Jian said at a regular briefing on Friday. “Raising tariffs further would be an added insult.”
President Xi Jinping’s strategy to strengthen manufacturing to stem a domestic economic slowdown has caused alarm abroad. U.S. and European Union leaders have rebuked Beijing over state aid, accusing it of fueling a flood of cheap exports that threatens jobs in the market. The EU will launch an investigation into EV subsidies in October, which could lead to additional tariffs by July.
Biden said last month that the United States was confronting China’s “unfair economic practices and industrial overcapacity.” “I don’t want a fight with China. I want competition, but I want fair competition.”
The tariffs are unlikely to have any immediate impact on Chinese companies, as the world’s top EV makers have avoided the U.S. market due to tariffs. The company’s solar power companies export mainly from third countries to the U.S. to avoid regulations, and U.S. companies are also seeking higher tariffs on that trade.
Biden and Trump are trying to appear tough on China as they head into a rematch in the November election. Last month, Biden signed a bill that begins a countdown on whether video-sharing platform TikTok will be sold by its Chinese parent company ByteDance or exit the U.S. market.
President Trump has promised to raise tariffs on China across the board if he is re-elected, vowing to impose a 60% tariff on all imports from China. Many Democrats reject this approach, in part because it would raise prices for American consumers struggling with inflation.
During the former Trump administration, the United States and China were engaged in a tit-for-tat trade war, and China retaliated with measures aimed at targeting agricultural exports and taking pains out of America’s heartland.
U.S. Sen. Chuck Grassley, R-Iowa, expects the Chinese government to respond again. “We know how China reacted when President Trump imposed tariffs,” he said. “They hurt agriculture with it. I don’t know if China will hurt agriculture the same way they did in the Trump era, but I think they will fight back.”
strategic tariffs
Biden’s announcement will be formalized by the office of U.S. Trade Representative Katherine Tai, who said last month that she expected the review, which began in 2022, to conclude soon. . He added that the administration was considering ways to make tariffs more strategic and effective.
The move comes as Biden announced last month that he would impose new 25% tariffs on Chinese steel and aluminum as part of a series of measures to shore up the U.S. steel sector and win over workers in an election year. This was done after the proposal was made. The pledge was seen as largely symbolic, as China currently exports little of either metal to the United States.
The Chinese government responded with restraint to the metal curb threat, imposing tariffs on U.S.-produced propionic acid, an export market worth $7 million to the United States last year, according to customs data. Still, tougher tariffs on a broader range of industries could prompt a stronger response from Chinese authorities.
The full scope of existing tariffs spans imports from industrial materials such as microchips and chemicals to consumer goods such as apparel and furniture. President Trump imposed the first tariffs in 2018, citing Section 301 of the Trade Act of 1974.
Biden’s team has been unable to reach an agreement on what to do about tariffs for years due to internal divisions. Some officials, including Treasury Secretary Janet Yellen, had argued that easing restrictions on purchases of household goods could help ease inflation in the United States.
While the Biden administration was considering the political implications of the tariff changes, the USTR began its legally required formal review of the implications in late 2022. Without such an assessment, containment measures would have automatically started expiring in mid-2022.
Under the Trump administration, the United States and China reached a so-called Phase 1 agreement in early 2020. It reduced some of the tariffs in exchange for China’s commitment to address intellectual property theft and increase purchases of energy, agricultural products, and industrial goods and services. 200 billion dollars in the two years until the end of 2021. China fell short of more than a third of its promise.
Biden’s tariffs come as the country’s volatile relationship with China stabilized in recent months amid continued diplomatic turmoil. After the US president met with the Chinese president in California last November, Biden said the two countries had made “real progress.”
–With assistance from Jennifer A. Dlouhy, Philip Glamann, Shikhar Balwani, Qianwei Zhang, Dan Murtaugh, Zhu Lin, Sangmi Cha, Yujing Liu, James Mayger, and Qizi Sun.
(Updates with details; background is in second and sixth paragraphs)
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