The US is planning to increase tariffs on solar cells and computer chips from China

Trade and Jobs in the U.S. with High-Tilt Rates on Imported Goods: Commentary on a “Hot American Dream” of Donald Trump

Trump had made tariffs on China one of his signature policy moves when he was in the White House. Some Democrats warned that this would hurt the economy, and that Americans would pay the price.

Treasury Secretary Janet Yellen said in a statement that she raised concerns last month during a trip to Beijing about “artificially cheap Chinese imports,” concerns that she said many other countries share. She said the tariffs are necessary to protect American workers and companies from the danger of a flood of unfairly traded products.

The move comes as Biden pushes to implement three pieces of legislation that contain hundreds of billions of subsidies to boost domestic manufacturing and clean energy sectors, as well as ahead of a presidential election where trade and jobs will be an issue.

Lael Brainard is Biden’s top economic adviser and told reporters that communities in Michigan and Pennsylvania have been harmed by China’s unfair practices.

Michael Froman, who was U.S. Trade Representative in the 90s, said that it was difficult to reduce tariffs because the affected industry would get used to them.

The White House tried to differentiate its approach from Trump’s. It points to comments made by Trump in rallies and interviews that he would broaden tariffs on all imported goods, including targeting Chinese cars, if he wins the election — something that they said would hike consumer prices.

The White House has downplayed the risk that the new tariffs could spark retaliation from China, saying that the issues have been discussed during meetings of top U.S. and Chinese officials, and were unlikely to come as a surprise.

It’s the latest move the US has taken amid efforts to ramp up domestic manufacturing while escalating trade tensions with China. All in all, the increased tariffs are expected to affect around $18 billion in annual imports.

The Biden administration is doubling down on their attempts to keep Chinese manufacturers out of the US. Chinese-made EVs are a lot more affordable than other options — around $10,000 for BYD’s Seagull compared to close to $40,000 for the cheapest Tesla model. China could not import its cars into the United States because of high tariffs. Now, that tariff rate is jumping to 100 percent from the current level of 25 percent.

Higher tariffs on electronics could affect the US EV industry. Tariffs on battery parts and lithium-ion batteries for EVs will increase to 25 percent from 7.5 percent this year. A similar increase for non-EV lithium batteries will go into effect in 2026. By 2025, the tariff rate on semiconductors from China will double to 50 percent.

Solar manufacturers in the US urged the Biden administration to impose tariffs on solar panels from four countries in Southeast Asia earlier this year, after a Commerce Department investigation determined that Chinese companies were circumventing tariffs by moving goods through other countries.

The US already blocks solar imports from China’s Xinjiang region, where roughly 40 percent of solar-grade polysilicon manufacturing takes place, over concerns about forced labor and human rights violations along the supply chain.

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