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Some Chinese imports to the US will now be subject to major tax increases upon arrival. Biden’s administration announced Tuesday that it’s raising tariffs on Chinese steel and aluminum, semiconductors, electric vehicles (EVs), batteries, solar cells, and medical equipment like syringes and needles, to name a few of the impacted goods.The hikes are intended to reduce the number of Chinese products in these categories that are ultimately brought into the US. Biden believes China is deploying “unfair trade practices” to push its exports around the world and doesn’t want the US to be so reliant on Chinese exports.”Despite rapid and recent progress in U.S. onshoring, China currently controls over 80% of certain segments of the EV battery supply chain, particularly upstream nodes such as critical minerals mining, processing, and refining,” the White House states. Chinese lithium-ion EV batteries will now face a 25% import tax this year compared to a previous rate of 7.5%. Certain Chinese aluminum exports, a material used to make EV batteries, will now be taxed 25%. Other “critical materials” in the battery production process like graphite will also see new import taxes of 25%, according to the announcement. These tariffs could impact Elon Musk’s Tesla, which reportedly gets about 40% of its cars’ battery materials from China. Tesla has already been facing financial challenges with lower sales, and it’s tried to cut prices and layoff huge numbers of staff to improve its position in recent months.Chinese EV imports will now face a 100% US import fee instead of the previous 25% tariff. This means it will become 300% more expensive than before to bring a Chinese EV to the US. Relatively few Chinese vehicles are being brought to the US, however, as Reuters reports that less than 65,000 Chinese cars were imported to the US in 2021. The White House says extensive subsidies have allowed Chinese EV exports to surge around the world—and likely wants to prevent what happened in Europe from occurring in the US. These vehicles tariffs are unlikely to affect China’s EV industry, as Chinese automakers don’t have US dealerships. Some US buyers might be frustrated, however, as Chinese EVs are substantially cheaper than US-produced alternatives. While you can’t buy new Chinese cars while in the US right now, some brands like Chery, a Chinese state-owned company, are reportedly trying to get US showrooms.
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Semiconductor chips from China are also impacted by the new tariffs, which raise import fees on Chinese chips from 25% to 50%. Biden’s administration cites the pandemic supply chain issues as a reason the US shouldn’t be so reliant on Chinese chips. The White House also argues that the billions in US Chips Act funding toward domestic manufacturing for companies like Intel, TSMC, Micron, and Samsung needs to be sheltered from Chinese competition. Biden has been pushing tech giants to produce chips domestically for years to create more US jobs—and has blocked advanced US chip exports to China.
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