Policy & Regulation

White House increases Chinese tariffs for critical industries like solar cells, batteries

White House increases Chinese tariffs for critical industries like solar cells, batteries
(Photo by Paul Teysen on Unsplash.)

President Biden is directing increases in tariffs targeting China across sectors like steel and aluminum, semiconductors, electric vehicles, batteries, critical minerals, solar cells, and ship-to-shore cranes, the White House announced Tuesday. President Biden has directed his trade representative to increase tariffs under Section 301 of the Trade Act of 1974 on $18 billion of imports from China.

In making its decision, the White House cited China’s “unfair trade practices” concerning technology transfer and intellectual property, as well as its “flooding” of global markets with “artificially low-priced” exports.

Solar cells

The tariff rate on solar cells (whether or not assembled into modules) will increase from 25% to 50% in 2024.

The White House argues this tariff will protect against China’s “policy-driven overcapacity that depresses prices” and inhibits the development of solar capacity outside of China. China has control of 80 to 90% of certain parts of the global solar supply chain, the White House said.

“The Administration made the right decision to strengthen protections for solar components we seek to build in the U.S.,” said Mike Carr, Executive Director of the Solar Energy Manufacturers for America (SEMA) Coalition. “While no one action can unwind the years of a concerted effort to dominate this industry, including in manufacturing equipment and heavily subsidized production by Chinese-headquartered firms in Southeast Asia, we are encouraged by this indication of the Biden administration’s commitment to use all the tools at their disposal in a targeted and strategic way.”

Steel and aluminum

The tariff rate on certain steel and aluminum products under Section 301 will increase from 0–7.5% to 25% in 2024.

The White House cited China’s policies and subsidies for its domestic steel and aluminum industries, which it says undercuts U.S.-made products with “artificially” low-priced metals made with carbon-intensive processes.

Semiconductors

The tariff rate on semiconductors will increase from 25% to 50% by 2025.

The White House estimates that if left unchecked, China would account for almost half of all new capacity coming online to manufacture certain legacy semiconductor wafers.

Electric Vehicles (EVs)

The tariff rate on electric vehicles under Section 301 will increase from 25% to 100% in 2024.

China’s exports of EVs grew by 70% from 2022 to 2023, the White House said.

Batteries, Battery Components and Parts, and Critical Minerals

The tariff rate on lithium-ion EV batteries will increase from 7.5%% to 25% in 2024, while the tariff rate on lithium-ion non-EV batteries will increase from 7.5% to 25% in 2026. The tariff rate on battery parts will increase from 7.5% to 25% in 2024.

The tariff rate on natural graphite and permanent magnets will increase from zero to 25% in 2026. The tariff rate for certain other critical minerals will increase from zero to 25% in 2024.

China currently controls over 80 percent of certain segments of the EV battery supply chain, particularly upstream nodes such as critical minerals mining, processing, and refining, the White House said.

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