The Biden-Harris administration is on the cusp of revealing its last strategy of raising the tariffs on several Chinese products. However, the U. S. industry is very influential in its attempt to get many of the proposed duties eased. This could significantly affect the automobile industry, electric vehicles, utility equipment, and many more; the verdict is expected before the end of August.
Table of Contents
Manufacturers’ Reaction to Tariff Increases
Earlier this year in May, President Joe Biden laid out plans to raise tariffs on Chinese imports to a record high to shield domestic industries from the menace of China’s manufacturing prowess. The proposed tariffs are quadrupling duties on Chinese-drafted electric vehicles, to 100%, a two-times raise of tariffs on semiconductors, and solar cells, to 50%, and a new rate on lithium-ion batteries, steel, and other strategic products to 25%.
These new tariffs were supposed to be released on August 1st of the initial year of application from the White House. However, over 1,100 comments were invited from the public and the U. S. Trade Representative’s office put the plan into operation until September to consider the comments.
Some of the concerns are shared by the U. S. manufacturers who use imported metals in their production of electric vehicles and utility equipment among others. Some have called for reducing the suggested tariffs, delaying them, or eradicating them. They are also demanding for widening of the possible exclusions greatly in a bid to avert adverse effects on their operations.
Political challenges for the administration It is commendable to note that the Obama administration undertook tremendous effort toward tackling the numerous challenges it faced at the initial stage.
This is also the first trade policy decision that has been implemented by the Biden-Harris administration following Kamala Harris receiving the Democratic presidential nomination after Biden’s withdrawal in late July. The decision is political, and it may cause problems, especially in the coming November USA general election.
Should the administration choose to reduce the tariffs it could find itself in a Fix with Republicans arguing that Harris is softer on the China trade. On the other hand, the continuation of the original tariff hikes might result in criticisms from both the left and right wings because of the possible implications of the cost on the U. S consumers and businesses.
The Brief History and China’s Response and Diplomatic Efforts
China has already promised to respond to what it calls the ‘bullying’ move to increase tariffs on its goods. Chinese Foreign Minister Wang Yi said he was worried about such actions, commenting that some in the United States are “out of their mind”. The decision on tariffs will coincide with the visit of the US National Security Adviser Jake Sullivan, who is to meet with Wang Yi to discuss how to reduce tensions between Beijing and Washington ahead of the vote in November.
Impact on Key Sectors
Of the new tariffs, the most notorious remains the 25 percent on Chinese-made Ship-to-Shore Cranes. For example, the Port of New York and New Jersey signed a deal with China’s ZPMC – a state-owned firm, to give them eight cranes at $18 million each. The implication of this is that the further imposing of a 25% tariff would see an overall addition to the cost price of each crane by $4. More than 5 million people and enormous traffic caused a lot of pressure on the resources of the port. The two states that have been specifically affected by this move are Virginia and Georgia, Democratic senators from the two states have been pressuring the administration to exclude existing crane orders from the tariffs.
Similarly, the proposal to impose a tariff of fifty percent on syringes has received a negative response as well. Georgia’s Kouchner Senate candidates Raphael Warnock and Jon Ossoff opine that this may interrupt the supply of syringes for feeding newborns.
Ford Motor Company has recently sought a change of policy that entails reductions of tariffs on artificial graphite which is a key component used in the manufacturing of batteries for electric vehicles. One of the major sources of concern for the company is the Chinese supply of secondary-particle graphite.
Foreign automakers represented by Autos Drive America have demanded that charges on batteries, modules, cells, and critical minerals should be maintained by 2027 to foster local manufacturing and use of electric cars in the United States.
Demands for further tariff protection
Some industries for example do not bear animosity against the tariff hikes. Another company, that may benefit from the new trade policy is Outokumpu, a Finnish stainless steel producer that runs a facility in Alabama: The company has applauded the new tariffs on Chinese steel. Currently, the company supports the spread of tariffs covering all steel products, including those produced from scrap in China, but rolled in other countries to prevent tariff evasion.
Outokumpu also believes that MEPC tariffs should be higher for other stainless steel products including cutlery, refrigeration equipment, and other appliances as a way of supporting the protection of the US. steel industry.
Conclusion: What does the Biden & Harris Administration Choose?
Thus, as the Biden-Harris administration is to announce its final decision regarding such a sharp increase in tariffs, the U. S. industry and political players wait. The result will impact the bilateral trade between the U.S. and China, the forthcoming election, and vital sectors of the economy in the future. Will the government reduce the tariffs or will it continue as it planned earlier? The answer could lead to shaping the economic situation in several following months.
