President Joe Biden’s administration is reportedly rushing to impose new tariffs on China as the 2024 election approaches.
Bloomberg News reported, citing anonymous sources, that the new tariffs would target what the Biden administration considers key strategic areas, but would add little to the overall U.S. trade imbalance with China. It is likely that there will be no impact.
“The US will impose new high tariffs focused on key industries such as electric vehicles, batteries and solar cells. Other existing Chinese taxes are also expected to remain largely in place. The announcement was made on Tuesday. “This is planned,” two people familiar with the matter said, according to Bloomberg News. report.
of wall street journal To tell The new tariffs include a quadrupling of duties on electric vehicles. The report sources information from “people familiar with the matter.”
The Biden administration is struggling with the tariff issue. While running for president, Biden mocked Donald Trump’s trade policies, insisting that China’s predatory mercantilism poses no threat to the U.S. economy or national security. Many expected Biden to lift at least some of the tariffs President Trump imposed on exports from China.
But dispelling U.S. economic nationalism has proven difficult, illustrating how the once-heretical trade views promoted by President Trump are now integrated into the political mainstream. There is.
U.S. Trade Representative Katherine Tai has reportedly been instrumental in fighting forces within President Biden who are trying to cave in to demands from China and U.S. companies to lift tariffs on China.
Biden proposed raising tariffs on Chinese steel in a speech to an audience of American steelworkers in Pittsburgh last month. The move is widely seen as a cynical ploy to win votes in the key battleground state of Pennsylvania, as the United States already imports large amounts of steel from China.
Plans to increase tariffs on imports of electric vehicles and other green technologies are similarly politically motivated. Senate Majority Leader Chuck Schumer last week joined a group of politically challenged Midwest Senate Democrats in urging Biden to raise tariffs on China.
The Biden administration’s newfound willingness to embrace tariffs is driven by election-year politics, so it may not last long if the president is reelected. Many in Washington expect Biden, in his second term, to be far more willing to cut tariffs because he no longer has to worry about the risk of voter backlash.
So-called strategic tariffs are unlikely to have a significant impact on the overall trade imbalance between the United States and China, as China’s economic policy requires it to continue running a large trade deficit with the United States. Instead, exports will shift to areas not subject to tariffs. As a result, other parts of the U.S. industrial base that Biden has not singled out for protection are likely to suffer as well.
In a thread about X, China trade scholar Michael Pettis explained:
This has nothing to do with general deindustrialization. The tariffs will certainly reduce U.S. imports of electric vehicles, batteries, and solar cells from China, but will not affect the trade imbalance between the two countries.
That is, as long as China continues to generate large amounts of excess savings, and as long as they are exported directly or indirectly to the financial and asset markets of the United States, China will continue to solve weak domestic demand with trade surpluses, and the United States This is because Japan will continue to resolve the slump in domestic demand with a trade surplus. There will be a corresponding trade deficit.
This means that strengthening the U.S. electric vehicle, battery, and solar sectors will likely come at the expense of other manufacturing sectors.
The new tariffs also do not address the issue of China diverting trade through third countries to avoid U.S. import duties. Excluding China, the U.S. trade deficit is currently near an all-time high. That’s partly because products originating in China or made in Chinese-owned factories continue to flood the U.S. market.
“If the United States really wants to reduce its trade deficit through tariffs, it needs to raise tariffs on all imports from the United States,” said a recent report from Japanese bank Nomura. “President Trump’s recent 10% ‘national ring’ initiative should not be dismissed lightly.”
