President Joe Biden is following in his predecessor’s footsteps. On May 14, the White House announced that the US government will impose new tariffs on China that officials say will not contribute to inflationary pressures because of their structure. Despite the incumbent slamming former President Donald Trump over tariffs, the current administration is emulating the presumptive Republican nominee’s trade policies.
Inside Biden’s Tariffs
The White House unveiled a plethora of sizable tariff hikes on $18 billion worth of Chinese imports that will take effect in 2024 and be phased in over three years. US officials say these levies are imperative to shield US industries from what they view as unfair competition. The most notable trade announcement is the quadrupling of tariffs on imported Chinese electric automobiles. The import tax will rise from 25% to 100%. Despite very few Chinese EVs driving on American roads, trade officials say they want to avoid the situation before Beijing dumps their cheap subsidized cars into the US market.
In addition, Washington will double the tariffs on Chinese solar cells from 25% to 50%. Levies on aluminum and steel imports will climb from 7.5% to 25%. Next year, import taxes on Chinese semiconductors will rocket from 25% to 50%.
“China is producing at a rate and with a trajectory that’s far in excess of any plausible estimate of global demand,” a senior administration official told reporters. “That is going to flood the global market with supply that undercuts our ability to build productive capacity at home and leaves all of us across the world more vulnerable to economic coercion.”
The latest moves also will target medical equipment. For the first time, 50% tariffs will be installed on medical needles and syringes. Medical gloves, face masks, and respirators manufactured in China will face higher levy rates, amounting to as high as 25%.
A recent Oxford Economic analysis estimates the new trade measures will lift inflation by 0.01%. But while experts and the administration insist that these planned tariff increases are not inflationary, a chorus of economists calls it bad economic policy.
“The Biden administration has two competing goals,” said Alex Durante, an economist for the Washington-based Tax Foundation think tank. “Tariffs, in general, are bad economic policy. I think the administration should be moving away from them.”
China Is Unhappy
Ahead of the official policy announcement, Treasury Secretary Janet Yellen told the press that the United States is not seeking “global domination of manufacturing.” Instead, she noted, these mechanisms are designed to establish a level playing field and bolster US supply chains.
Janet Yellen (Photo by Sebastián Vivallo Oñate/Agencia Makro/Getty Images)
“I have been very clear in my engagement with the Chinese that we believe there needs to be a level playing field for competition and that we have particular concern about clean energy, semiconductors, and areas where China has, through its policies, encouraged so much investment that it’s led to overcapacity,” she said.
As for China’s response, Yellen stated that she does not anticipate anything “significant.” However, she might have spoken too soon as Beijing has already planned to retaliate and accused the Biden administration of continuing the “politicization and weaponization” of trade. “China strongly expresses its dissatisfaction. It will seriously impact the bilateral relations. The U.S. should immediately correct its wrong practices and cancel the tariff measures imposed on China. China will take resolute measures to defend its own rights and interests,” the Ministry of Commerce said in a statement.
Moreover, Chinese leadership argued that the Biden administration is violating international trade rules that the United States helped create at the World Trade Organization (WTO). Officials also rejected “groundless” claims that Beijing has supported factory overcapacity to control the global green energy industry.
Getting Ahead of Trump
As Liberty Nation noted, Biden criticized the Trump tariffs, calling them “shortsighted.” However, since January 2021, the president has kept Trump’s China tariffs on more than $350 billion of Chinese goods intact. The administration has fought many US court challenges to the Trump-era levies. The latest tariffs, experts say, are doubling down on a policy that Biden slammed.
The White House has signaled this strategy for weeks to get ahead of Trump. Senior administration officials contended that the presumptive GOP challenger’s across-the-board 10% tariffs would present more risk to consumers than the newly proposed strategically targeted levies. “And so this is a very different strategy in which tariffs are not a stand-alone strategy,” the individual stated.
The Trump campaign blasted the planned tariff hikes, purporting that Biden has failed “to protect American manufacturers” and that this “is coming back to haunt his administration.” It added, “Hard-working Americans know it’s too little, too late. The forgotten men and women know President Trump is the only one who has been and will be tough on China.”
Will this be enough to enhance Biden’s support in the battleground states like Pennsylvania and Wisconsin? Trump enjoys a three-point advantage in the Keystone State, while Biden maintains a two-point edge in the Badger State.
The Economics of Tariffs
A chorus of economists opposes protectionist trade policies. Politicians of all stripes allude to America’s trade deficits, but they are neither good nor bad. Tariffs are political tools rather than ones grounded in economics, as they are designed to garner electoral support from industries that benefit from these protectionist endeavors. And, once they are implemented, levies are hard to eradicate since companies become accustomed to the state-sponsored crutch.
