By FATIMA HUSSEIN, SEUNG MIN KIM, AAMER MADHANI and DIDI TANG (Associated Press)
WASHINGTON (AP) — The Biden administration is getting ready to place significant new taxes on electric vehicles, computer chips, solar equipment, and medical supplies that are brought in from China, according to a US official and another person who knows about the plan.
The taxes on electric vehicles could increase four times – from 25% to 100%. The plan was described by the sources anonymously because they were not allowed to give details before an official announcement.
The taxes, which are expected to be announced on Tuesday, are coming as officials within the Democratic administration are frustrated with China's excessive manufacturing of electric vehicles and other products that they believe are a threat to US jobs and national security.
Developed countries like the United States and its European allies are worried that a flood of cheap Chinese exports will overpower domestic manufacturing. In the US, there is a particular concern that China's environmentally friendly products will undermine large climate-friendly investments made through the Democrats' Inflation Reduction Act that President Joe Biden signed into law in August 2022.
The additional taxes also have some political importance leading up to the November presidential election. Both Biden and his expected Republican opponent, former President Donald Trump, have promised to be tough on China, the world's second largest economy after the United States and an emerging geopolitical rival.
Biden has described his policy as 'competition with China, not conflict.' He has supported an industrial strategy that has used government financial assistance to attract private investment in new factories and advanced technology, while limiting the sale of computer chips and other equipment to China.
Trump has suggested the idea of imposing large taxes on China to decrease the US trade deficit with that country. He has frequently said that Biden's support for electric vehicles would ultimately lead to American factory jobs going to China.
The announcement on Tuesday is expected to maintain some of the taxes that were imposed during Trump's time in office, which covered about $360 billion in Chinese goods. The new tax on imports would include products such as Chinese syringes and solar equipment.
There is a possibility that taxes could lead to a wider trade conflict between the two countries as they react to each other's actions. China is trying to create a technological advantage and move up the economic ladder.
There are some signs that China is reducing its production of lithium-ion batteries used in electric vehicles, cell phones, and other electronics at a time when it is facing increasing criticism from the West.
On Wednesday, China's Ministry of Industry and Information Technology issued a draft rule intended to 'strengthen the management of the lithium-ion battery industry and promote the sector's high-quality growth.'
The initial version, which was published on the ministry’s site for public feedback, states that companies should aim for improved technological innovation, better quality, and reduced costs, instead of expanding existing capacity.
Facilities producing lithium batteries in restricted farmlands or industrial zones should be closed, according to the draft.
U.S. Trade Representative Katherine Tai is currently reviewing the tariffs implemented during the Trump administration, and Republican lawmakers, including House Ways and Means Committee Chair Jason Smith and Trade Subcommittee Chair Adrian Smith, are urging a prompt conclusion to the investigation.
In a letter to Tai this week, they expressed concerns about the serious risks for U.S. farmers, manufacturers, innovators, small businesses, and workers if the four-year review continues without action.
Ohio Democratic Senator Sherrod Brown stated in a tweet on Friday that simply imposing tariffs is inadequate and that there is a need to prohibit Chinese electric vehicles from entering the U.S.
The Biden administration has also announced its intention to examine smart cars manufactured in China that can collecting sensitive data about American users. In February, the Commerce Department issued a notice to investigate the national security risks posed by “connected vehicles” from China and other adversarial countries.
Currently, there are very few Chinese-made EVs in the U.S., but officials are concerned that low-cost models could soon inundate the U.S. market, even with a 25% tariff.
A vehicle model introduced last year by Chinese automaker BYD is sold for approximately $12,000 in China. The car’s workmanship matches that of U.S.-made EVs that cost three or four times as much, causing anxiety in the U.S. industry.
The Alliance for American Manufacturing, a coalition of businesses and the U.S. Steelworkers union, released a report in February warning that the influx of affordable Chinese automobiles into the American market
could potentially devastate the U.S. auto sector, which accounts for 3% of America’s GDP, as per the report. During her visit to Guangzhou and Beijing in early April, Treasury Secretary Janet Yellen highlighted the production ofelectric vehicles and their batteries as well as solar energy equipment – sectors that the U.S. administration aims to promote domestically – as areas where Chinese government subsidies have led to a rapid increase in production. “China's overwhelming capacity has exceeded global demand. Actions taken by the PRC today can impact world prices,” she remarked in April during a speech in Beijing, using the acronym for China’s official name, the People’s Republic of China.
“When the global market is flooded with artificially inexpensive Chinese products, the viability of American and other foreign companies is called into question,” she added.
The proposal for new tariffs was previously reported by Bloomberg News and The Wall Street Journal.
By FATIMA HUSSEIN, SEUNG MIN KIM, AAMER MADHANI and DIDI TANG (Associated Press) WASHINGTON (AP) — The Biden administration intends to impose significant new tariffs on electric vehicles, semiconductors, solar equipment, and medical supplies imported from China, as stated by a U.S. official and another individual familiar with the plan. Tariffs on electric vehicles, in particular, […]
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