On May 14, 2024, President Biden announced new trade tariffs on goods from China, aimed at protecting American workers and businesses. The measure imposes tariffs between 25% and 100% of the value of the imported item, applicable to over $18 billion worth of goods. Some of these products were previously duty-free, while others were already subject to Section 301 tariffs, which are now being increased. The tariffs extend to at least seven critical categories of high-value products across strategic sectors such as semiconductors, electric vehicles, batteries, critical minerals, solar cells, ship-to-shore cranes, medical products, and steel and aluminum, as summarized below.

The new tariffs come at the conclusion of an in-depth review of the impact of the Section 301 tariffs on China's trade practices and the U.S.-China trade relationship by the United States Trade Representative (USTR). Crucially, USTR's analysis concluded that Section 301 tariffs did reduce the amount of U.S. imports of products from China, and that the institution of Section 301 tariffs created more favorable business conditions for foreign businesses in China, including U.S. businesses. The measures are scheduled to be implemented between 2024 and 2026.

• Semiconductors: Tariffs on semiconductors will increase from 25% to 50% in the next year and focus on China's increasing share in the production of semiconductor wafers
• Electric Vehicles (EVs): The tariff on electric vehicles will increase from approximately 25% to 100%. The Biden administration has long been concerned with production subsidies and forced mergers in the PRC EV industry and may be concerned about impending overcapacity
• Lithium-Ion Batteries, Non-Lithium-Ion Batteries, Battery Components and Parts (Including Non-Lithium-Ion Batteries): Tariffs on lithium-ion batteries will increase from 7.5% to 25% this year, with tariffs on lithium-ion non-EV batteries set to increase from 7.5% to 25% in 2026. Other battery parts will also be tariffed at 25%, up from the current rate of 7.5%
• Critical Minerals: Tariffs for critical minerals will increase from 0% to 25% this year. These will include manganese ores and concentrates; cobalt ores and concentrates; aluminum ores and concentrates; radium; uranium and its compounds, alloys, and mixtures; tungstates; and over a dozen other critical mineral products. The tariff on critical minerals comes as the U.S. seeks to decrease dependence on China, the leading supplier of many critical minerals key to electric vehicle, defense, and other high-technology products, and increases investment in domestic production of these materials. Tariffs of 25% on natural graphite will be delayed until 2026
• Permanent Magnets: Tariffs will increase to 25% in 2026 on permanent magnets, including those necessary to produce EV batteries
• Solar Cells: Tariffs on solar cells will double to 50% in 2024, regardless of whether they are assembled into modules at time of import. USTR noted that its concerns about solar panel overcapacity have continued for years
• Ship-to-Shore Cranes: Tariffs on ship-to-shore cranes will increase from 0% to 25% this year and, according to the USTR report, are designed to "support the security interests of the United States from the threat of Chinese state-sponsored cyber intrusions of critical infrastructure"
• Medical Products: Medical products, including N95 masks, syringes, and needles, will be tariffed at a rate of 50% starting this year. These tariffs are designed to encourage U.S. buyers to develop alternate supply chains, given the strategic importance of these products
• Steel and Aluminum: Tariffs on steel and aluminum products under Section 301 will increase from 0-7.5% to 25% in 2024 to meet the challenges of continued PRC overcapacity

Most notable among the new tariffs is the staggering 100% tariff the Biden administration placed on Chinese EVs. The Biden administration not only tariffed electric vehicles, but also key components of electric vehicles, including lithium-ion batteries, permanent magnets, and critical minerals. These tariffs reflect a growing concern about the prospect of overcapacity of high-value exports of Chinese EVs, the arrival of cheap Chinese rivals to U.S. EV brands, and the acknowledgment of the strategic importance of EVs to both the U.S. and Chinese economies in the coming decades. Relatedly, the tariffs are issued in tandem with efforts by the Biden administration to bolster those U.S. industries in competition with Chinese imports, such as through the Bipartisan Infrastructure Law, the Defense Production Act, and the Inflation Reduction Act, which extends grants and loans to the U.S. battery sector.

The new tariffs build on prior efforts to counter the impact of Chinese unfair trade practices by the Biden administration, with the rollout of the CHIPS and Science Act in 2022, providing domestic funding structures for new R&D activities, and an August 2023 executive order from the White House limiting certain U.S. outbound investment into China's semiconductor industry and other advanced technologies deemed to pose national security risks to the United States.

Tariffs under the authority of Section 301 of the Trade Act of 1974 have remained the favored mechanism for modern presidents to leverage trade pressures on China. President Trump utilized Section 301 extensively during his administration, notably placing trade restrictions on hundreds of billions of dollars of goods in the so-called List 1, 2, 3, and 4A tariffs. Solar cell tariffs are not new but are now being levied under a separate executive tariff authority. President Trump also placed temporary safeguard tariffs of up to 30% on imported solar cells in 2018 under Section 201 of the Trade Act of 1974. The solar tariffs were extended by President Biden in February 2022 for an additional four years.

On Tuesday afternoon, a representative from China's Ministry of Commerce responded to news about the tariffs, stating that China "will take resolute measures to safeguard its own rights and interests." The Ministry of Commerce representative further noted that China will "take all necessary actions to protect its legitimate rights" and urged the Biden administration to "correct its wrongdoing."

Responsive Chinese trade measures are likely forthcoming. They may not necessarily stay along tariff lines as imposed by the Biden administration today, although critical minerals remain a likely target for Chinese retaliation, given the severity of the 100% tariffs imposed on Chinese EVs.