In a move set to intensify trade tensions with Beijing, the United States is poised to raise tariffs on a wide range of Chinese imports, including electric vehicles (EVs), batteries, computer chips, and medical products, starting August 1st. The U.S. Trade Representative’s office (USTR) announced this decision on Wednesday, stating that the tariff hikes aim to protect American jobs and industries from perceived threats posed by China’s industrial policies.
President Joe Biden’s administration will maintain tariffs imposed by his predecessor, Donald Trump while escalating duties on specific sectors. Notably, import duties on Chinese EVs are set to quadruple to over 100%, while semiconductor tariffs will double to 50%. The USTR has opened a 30-day public comment period, seeking input on the potential impact of these measures on the U.S. economy and consumers.
The proposed tariff increases target products deemed crucial for China’s economic dominance or sectors where the U.S. has invested heavily, such as clean energy and advanced manufacturing. Washington has committed hundreds of billions of dollars in subsidies to bolster domestic industries like EVs, solar, and semiconductors, citing concerns over China’s excess production capacity and state-driven policies.
The new measures will affect USD 18 billion worth of Chinese imports, including steel, aluminium, semiconductors, EVs, critical minerals, solar cells, and cranes. However, the impact on the U.S. EV market may be minimal, as prior vehicle tariffs have already limited Chinese EV imports.
The largest affected categories are lithium-ion batteries, accounting for USD 13.2 billion of targeted imports from China in 2023. These batteries, crucial for EVs and energy storage, face a 25% duty hike starting in 2026.
U.S. Trade Representative Katherine Tai has defended the revised tariffs as necessary to protect American intellectual property from alleged theft by China. However, the administration has also recommended tariff exclusions for industrial machinery imports from China, including equipment used in solar product manufacturing.
China has condemned the tariff escalation and vowed to take “resolute measures” to safeguard its interests. Beijing recently announced an anti-dumping probe on certain industrial plastics from the U.S., Europe, Japan, and Taiwan, signalling potential retaliation.
The USTR will provide details on how companies can apply for machinery exclusions from the tariffs in a separate notice. Any granted exclusions will be backdated to Wednesday and expire on May 31, 2025.
As the trade dispute intensifies, U.S. Treasury Secretary Janet Yellen has urged G7 allies to jointly push back against China’s industrial policies, although she clarified that she is not asking them to mirror the new U.S. tariffs.