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How hard will new Biden tariffs hit China?

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FILE PHOTO: The flags of the United States and China fly from a lamppost in the Chinatown neighborhood of Boston, Massachusetts, U.S., November 1, 2021.   REUTERS/Brian Snyder/File Photo
FILE PHOTO: The flags of the United States and China fly from a lamppost in the Chinatown neighborhood of Boston, Massachusetts, U.S., November 1, 2021. President Biden is set to announce new China tariffs as soon as Tuesday, targeting sectors including EVs and solar equipment. REUTERS/Brian Snyder/File Photo

BEIJING – U.S. President Joe Biden is set to announce new China tariffs as soon as Tuesday, targeting sectors including electric vehicles, medical supplies and solar equipment, according to people familiar with the matter.

The expected move by the Biden administration comes ahead of the November presidential election. Biden, a Democrat seeking re-election, has taken a tough-on-China approach that would maintain existing tariffs on many Chinese goods set by former President Donald Trump, his expected Republican challenger.

The impact on Chinese industries, however, is expected to be limited.

Organizations
Does China export EVs to the US?

Very few. In the first quarter, Geely was the only Chinese automaker to export to the United States with 2,217 cars, according to data from the China Passenger Car Association.

Geely, which has sold some EVs in the U.S. market under its Polestar brand, did not immediately respond to a request for comment. China’s Geely and Sweden’s Volvo Cars founded EV maker Polestar Automotive, which makes most of its cars in China. Volvo is majority-owned by Geely.

Polestar CEO Thomas Ingenlath told Reuters last month the company is accelerating efforts to produce more vehicles outside China. Polestar aims for a sales breakdown of 40% in Europe, 30% in the United States and 30% in the Asia-Pacific region, he said.

Ingenlath told Reuters last year that Polestar will start production in South Carolina for U.S. and European markets from 2024.

Are new tariffs a threat to China’s solar industry??

The market is small for China and exports to the United States have been subject to tariffs for more than a decade. Further duties were also recently imposed on several Chinese solar panel makers who finished their panels in Southeast Asia.

Over 80% of solar panel manufacturing now takes place in China, and the cost of making a panel in China is 60% cheaper than in the U.S., according to the Center for Strategic and International Studies, a Washington think tank.

Last year, China exported $3.35 million solar cells to the U.S., less than 0.1% of China’s total exports. Outbound shipments of completed solar panels to the U.S. stood at $13.15 million in 2023, only 0.03% of China’s solar panel exports.

Industry observers said the equipment to produce solar panels involves a complicated supply chain. How the new U.S. tariffs affect sales of that equipment will depend on the details of the U.S. trade levy, they said.

What about medical supplies?

Chinese-made medical supplies such as syringes and personal protective equipment also face additional U.S. tariffs, sources familiar with the decision said.

According to WTO data, China exported $30.9 billion medical goods to the United States in 2022, accounting for about one fifth of China’s overall exports of medical goods.

The expected tariffs are part of the Biden administration’s broader strategy to protect the U.S. against supply shortages seen during the pandemic that left hospitals scrambling to find critical equipment, the sources said.

In December, the United States Trade Representative announced a further extension of China-related “Section 301” tariff exclusions until May 31.

The American Medical Manufacturers Association has called for these exclusions to be revoked, arguing they are no longer needed to deal with a COVID-19 emergency. The association says American manufacturers need the chance to compete with imports on a more level playing field.

More tariffs on metal products?

Biden in April also called for tripling U.S. tariffs on Chinese metal products. That would apply to more than $1 billion worth of steel and aluminium products, a U.S. official said.

(Reporting by Ellen Zhang and Sarah Wu in Beijing; Additional reporting by Andrew Silver in Shanghai and Qiaoyi Li in Beijing; Editing by Jacqueline Wong)

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