President Biden is launching a preemptive strike against cheap Chinese imports of electric vehicles, batteries, solar equipment and other goods with aggressive new tariffs on Tuesday.
Why it matters: It's a long-term protectionist play to allow America's nascent green technology, infrastructure and manufacturing industries — which Biden is subsidizing with over $1 trillion in direct investments — to get up to scale.
- But Biden's new tariffs also have a shorter-term political target: Former President Trump.
- They're part of a broader political strategy to co-opt Trump on some of the former president's perceived strengths: China, the border and relations with the business community.
Driving the news: Biden will announce the new tariffs on an additional $18 billion of Chinese imports in a Rose Garden ceremony at 12:15 p.m. ET today.
- The goal: to ensure that U.S. green tech and manufacturing industries are "not undercut by a flood of unfairly underpriced exports from China in areas like EVs batteries, vital medical equipment, steel and aluminum semiconductors and solar, " Lael Brainard, the director of the National Economic Council, told reporters.
Zoom in: Quadrupling tariffs on Chinese EVs and tripling steel and aluminum duties allow Biden to flesh out his broader argument that his China approach is both tougher and more targeted than Trump's.
- But there are clear risks attached to Biden's strategy. For one, five months ahead of the election, Biden could escalate a trade war with Beijing. That could have negative consequences for an economy voters don't care for.
- Biden is also engaging with Trump on an issue the former President clearly relishes and which has bolstered his popularity in rural America.
State of play: Biden officials said they didn't know how — or if — Beijing will retaliate. But they do expect Beijing to speak out publicly.
- "Hopefully we will not see a significant Chinese response — but that's always a possibility," Treasury Secretary Janet Yellen told Bloomberg.
- Biden is also keeping Trump-era tariffs on some $300 billion in Chinese goods — a tacit recognition that both parties are now more hawkish on China.
By the numbers: For EVs, the tariff rate will increase from 25% to 100% in 2024.
- For lithium-ion EV batteries: 7.5% to 25% in 2024.
- For semiconductors: 25% to 50% by 2025.
- For solar cells: 25% to 50% in 2024.
- For certain medical products, like syringes and needles: 0% to 50% in 2024.
- And for certain steel and aluminum products tariffs: 0–7.5% to 25% in 2024.
Between the lines: Biden officials argue that their tariffs will not add to U.S. inflation because the amount of goods they are targeting is too small.
- At the same time, they argue that Trump's tariff proposals — which include across-the-board 60% increases on all Chinese imports — will contribute to inflation.
The big picture: Biden has loudly and proudly articulated his belief that the United States needs a new industrial policy to help stand up America's clean technology manufacturing and improve supply lines for critical industries.
- The Biden administration has also been sounding the alarms about overcapacity in China's economy, with Yellen using a trip to Beijing in April to warn of a new potential "China shock."
- Biden's Inflation Reduction Act is focused on subsidizing clean energy technologies at a price tag that could reach $1.2 trillion. The Chips and Sciences Act includes some $53 billion for loans and grants to build semiconductors in the U.S.
