Biden hikes tariffs on Chinese EVs, computer chips, medical products

By Trevor Hunnicutt and Steve Holland

WASHINGTON (Reuters) -U.S. President Joe Biden on Tuesday unveiled steep tariff increases on an array of Chinese imports including electric vehicle (EV) batteries, computer chips and medical products, risking an election-year standoff with Beijing as he woos American voters who give his economic policies low marks.

"American workers can out-work and out-compete anyone as long as the competition is fair, but for too long it hasn't been fair," Biden said during a speech in the White House Rose Garden before unions and companies. "We're not going to let China flood our market."

China immediately vowed retaliation. Its commerce ministry said Beijing was opposed to the U.S. tariff hikes and would take measures to defend its interests.

Biden will keep tariffs put in place by his Republican predecessor Donald Trump while ratcheting up others, including a quadrupling of EV duties to over 100% and doubling the duties on semiconductor tariffs to 50%.

The new measures affect $18 billion in imported Chinese goods including steel and aluminum, semiconductors, electric vehicles, critical minerals, solar cells and cranes, the White House said. The EV figure, while headline-grabbing, may have more political than practical impact in the U.S., which imports very few Chinese EVs.

The announcement confirmed earlier Reuters reporting.

The United States imported $427 billion in goods from China in 2023 and exported $148 billion to the world's No. 2 economy, according to the U.S. Census Bureau, a trade gap that has persisted for decades and become an ever more sensitive subject in Washington.

U.S. Trade Representative Katherine Tai said the revised tariffs were justified because China was stealing U.S. intellectual property. But Tai recommended tariff exclusions for hundreds of industrial machinery import categories from China, including 19 for solar product manufacturing equipment.

FREE TRADE NO MORE

Even as Biden's steps fell in line with Trump's premise that tougher trade measures are warranted, the Democrat took aim at his opponent in November's election.

Biden cast Trump's 2020 trade deal with China as failing to increase American exports or jobs, and he said a Trump proposal to raise import tariffs 10% across-the-board from any point of origin would raise prices.

Trump, who has floated tariffs of 60% or higher on all Chinese goods, said on Tuesday the Biden administration's new tariffs should be applied to other types of vehicles and products "because China's eating our lunch right now."

"He's been feeding them a long time," Biden retorted when asked about the comment.

Administration officials said their measures are combined with domestic investment in key industries and unlikely to worsen a bout of inflation that has already angered U.S. voters.

Biden has struggled to convince voters of the efficacy of his economic policies despite a backdrop of low unemployment and above-trend economic growth. A Reuters/Ipsos poll last month showed Trump had a 7 percentage-point edge over Biden on the economy.

Analysts have warned that a trade tiff could raise costs for EVs overall, hurting Biden's climate goals and his aim to create manufacturing jobs.

Biden has said he wants to win this era of competition with China but not to launch a trade war. He has worked in recent months to ease tensions in one-on-one talks with Chinese President Xi Jinping.

Both 2024 U.S. presidential candidates have departed from the free-trade consensus that once reigned in Washington, a period capped by China's joining the World Trade Organization in 2001. Trump's broader imposition of tariffs during his 2017-2021 presidency kicked off a tariff war with China.

As part of the long-awaited tariff update, Biden will increase tariffs this year under Section 301 of the Trade Act of 1974 from 25% to 100% on EVs, bringing total duties to 102.5%, from 7.5% to 25% on lithium-ion EV batteries and other battery parts and from 25% to 50% on photovoltaic cells used to make solar panels. Some critical minerals will have their tariffs raised from nothing to 25%.

The tariffs on ship-to-shore cranes will rise to 25% from zero, those on syringes and needles will rise to 50% from nothing now and some personal protective equipment (PPE) used in medical facilities will rise to 25% from as little as 0% now. Shortages in PPE made largely in China hampered the United States' COVID-19 response.

More tariffs will follow in 2025 and 2026 on semiconductors, as well as lithium-ion batteries that are not used in electric vehicles, graphite and permanent magnets as well as rubber medical and surgical gloves.

A step Biden previously announced to raise tariffs on some steel and aluminum products will take effect this year, the White House said.

A number of lawmakers have called for massive hikes on Chinese vehicle tariffs or an outright ban over data privacy concerns. There are relatively few Chinese-made light-duty vehicles being imported now.

The United Auto Workers, a politically important union that endorsed Biden, said the tariff moves would ensure that "the transition to electric vehicles is a just transition."

(Reporting by Trevor Hunnicutt in WashingtonAdditional reporting by David Shepardson, David Lawder, Jeff Mason and Andrea Shalal in Washington; Editing by Matthew Lewis, Ros Russell, Heather Timmons and Nick Zieminski)