Biden cranks up the heat on China with wall of tech tariffs

It's not just EVs – semiconductors, batteries, and solar cells all hiked

The Biden administration's Chinese tariff hikes were formally announced on Tuesday including, among other items, a doubling on semiconductors and solar cells and a more than tripling on batteries.

This is in addition to the quadrupling of tariffs on Chinese EVs reported on Monday.

The White House statement called the tariffs "carefully targeted at strategic sectors" as a "response to China's unfair trade practices." They cover $18 billion worth of imports from China annually.

The increases followed an "in-depth review," said the administration. The tariffs were introduced during the Trump administration and were up for a planned evaluation. While it was generally expected to have a mix of rising and falling tariffs following the review, none actually declined.


Semiconductors will see a tariff increase from 25 to 50 percent by 2025, which, when combined with the $39 billion worth of semiconductor incentives from the CHIPS Act, is expected to promote American chip products.

"China's policies in the legacy semiconductor sector have led to growing market share and rapid capacity expansion that risks driving out investment by market-driven firms," said the White House. The US government expects China to account for almost half of all new capacity coming online to manufacture certain legacy semiconductor wafers over the next three to five years.

The Biden administration also warned against over-reliance on China, lest the world see a re-emergence of supply chain disruptions like the ones experienced during the COVID-19 pandemic.

Batteries and critical minerals

The import taxes for lithium-ion batteries and battery parts all increased from 7.5 percent to 25 percent. However, for battery parts and EV batteries, that will take effect in 2024, while non-EV batteries won't increase until 2026.

Tariffs on natural graphite and permanent magnets are new to the scheme, going from nada to 25 percent in 2026. Other critical minerals will see the same, but two years earlier.

"Despite rapid and recent progress in US onshoring, China currently controls over 80 percent of certain segments of the EV battery supply chain, particularly upstream nodes such as critical minerals mining, processing, and refining," stated the announcement.

Solar cells

A hike on solar cell, both assembled and not, tariff rates from 25 percent to 50 percent in 2024 is designed to "protect against China's policy-driven overcapacity that depresses prices and inhibits the development of solar capacity outside of China." The Biden administration said China dominates upward of 80 to 90 percent of certain parts of the global solar supply chain.

The wider conversation

US Treasury Secretary Janet Yellen, who was once outspoken against the tariffs, told US media she "didn't believe American consumers will see any meaningful increase in prices they face."

She argued that the tariffs as they are now are very carefully targeted to areas where there is an over-dependence on China.

"These are areas where the investments that we are making will ultimately result in lower prices," alleged Yellen.

"Mainly, these tariff increases serve to protect firms and workers that are being supported by the incentives, the tax incentives, and other incentives in the semiconductor and CHIPS Act and Inflation Reduction Act," she added.

Yellen said she hopes China reacts in a "rational way."

Whether merely rhetoric or an actual threat, China's Foreign Ministry spokesperson Wang Wenbin has multiple times reiterated that China will "take all necessary measures to defend its rights and interests."

Beijing is not the only one unhappy about the tariffs. The US-China Business Council (USBC) expressed disappointment.

USBC president Craig Allen claimed "maintenance of the prior tariffs –with no reductions – and imposition of additional tariffs ultimately make it harder for American companies to compete in the US and abroad, cost American jobs, and increase prices for US manufacturers and consumers during a time of ongoing inflation." ®

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