On Tuesday, May 14, 2024, United States President Joe Biden introduced a series of tariff increases on imports from China.
The tariff increase will affect $18 billion worth of imports from China, targeting “strategic sectors” that align with those in which the Biden-Harris administration has invested to create US jobs.
“China’s unfair trade practices concerning technology transfer, intellectual property, and innovation are threatening American businesses and workers. China is also flooding global markets with artificially low-priced exports,” said White House representatives in a statement, noting that China controls 70–90% of global production for critical inputs within these key sectors.
The chip war continues
Unsurprisingly, one of the sectors the tariff hikes will affect is that of semiconductors, further intensifying the US-Chinese so-called ‘chip war,’ where the two superpowers compete to dominate the production, research, and development of the world’s smallest but most important computing hardware: the microchip.
“Computer chips are in everything for all aspects of our everyday life and in the military. The nation that can develop, or has access to the best microchips, is the nation that is the strongest militarily, technologically, and economically, and across everything, they are the strongest,” engineer and host of ‘The AI Revolution’ podcast, Anders Bæk told Macroticker earlier in the month.
The US tariff rate on semiconductors will increase from 25% to 50% by 2025.
An American auto industry
Another notable tariff hike is the one announced on electric vehicles (EVs).
According to the White House, China’s export of EVs grew by 70% between 2022 and 2023, which goes against Biden’s “vision of ensuring the future of the auto industry will be made in America by American workers.”
Therefore, the administration will introduce extraordinary hikes, raising the rate of US tariffs from 25% to 100% in 2024.
“It surprised me greatly that Biden has taken such a strong stance at this point,” says geopolitical analyst Mikkel Rosenvold.
“Why is the EV sector so relevant? Well, it’s both symbolic and practical. The Chinese EVs are flooding European and US car markets right now with extremely competitive prices that are being kept low by favorable currency conditions and the Chinese government supporting EV manufacturers to a point where they don’t care about making profit on each sold car. This is obviously unsustainable, but in the meantime, US car manufacturers could suffer greatly.”
Strategic moves
According to Rosenvold, Biden suddenly taking a firm position against China in an election year is no coincidence.
“Domestically, a strong stance on China, and a strong ‘anti-Chinese EV’ stance, is likely to be universally popular and positions Biden as ‘tough on China’,” he explains. “His election opponent, Donald Trump, will have a very hard time attacking this position or ‘out-toughing’ Biden on the China issue now.”
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Internationally, the tariff hikes also send a clear signal, Rosenvold says,
“Geopolitically, Biden wants to signal to the Chinese that the US is ready to push back on the Chinese state-funded price dumping of EV vehicles. Basically, Biden is signaling that the US is ready to wage a trade war.”
In addition to the increases already mentioned, the tariff hikes will affect imports of steel and aluminum, solar cells, ship-to-shore cranes, medical products, batteries, battery components, parts, and critical minerals.