How hard will new Biden tariffs hit China?
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[May 13, 2024] By
Ellen Zhang, Sarah Wu
BEIJING (Reuters) -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.
DOES CHINA EXPORT EVS TO THE UNITED STATES?
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.
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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.
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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
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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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