What to Know About New Tariffs on Chinese Goods

By: Keith Wagstaff · May 23, 2024 · Reading Time: 3 minutes

Biden Takes on China

Last week, President Joe Biden announced tariffs on some $18 billion worth of Chinese goods, building on policies instituted by his predecessor, former President Donald Trump.

Biden focused on goods he claimed were unfairly subsidized by the Chinese government, including steel, electric vehicles, batteries, and solar panels.

This should be good news for green energy companies already benefiting from the Inflation Reduction Act. But what does it mean for American consumers and workers?

The Details

Steel and aluminum from China will be hit with a 25% levy. That jumps to 50% for semiconductors, which have been a focal point in the administration’s tech trade war with Beijing. The same 50% rate will apply to solar panels. But it doesn’t stop there: Electric vehicles will be hit with a whopping 100% tariff rate.

“China heavily subsidized all these products, pushing Chinese companies to produce far more than the rest of the world can absorb and then dumping the excess products on the markets at unfairly low prices,” Biden said at the White House.

Cause and Effect

American consumers want cheaper EVs. With these tariff increases, it’s unlikely those EVs will come from China. In that way, these latest tariffs could be successful.

Since electric vehicles from Chinese automakers such as BYD aren’t currently available in the United States, it’s possible few Americans will notice the increased rates. The tariffs should be welcomed by American companies including Tesla (TSLA) and Ford (F), as well as European carmakers such as Mercedes-Benz Group AG (MBGAF), which has several plants in the US. Even though certain parts could get more expensive due to the trade restrictions, any consumer demand will likely be fed by domestic or other non-Chinese car makers. As for workers, the tariffs could indeed be beneficial, especially in the clean energy sector, where job creation has been a focus for the administration. But as with so many government policies, only time will tell how it will really shake out.

This was likely not the last round of tariffs either. Both President Biden and former President Trump, who stand to face off in this year’s election, have a tough stance on trade with China.

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