A day after US President Joe Biden warned that Donald Trump’s plan for higher tariffs would be a “major mistake”, his own administration has levied costly new tariffs on imports of critical materials from China.
The office of the US trade representative on Wednesday announced that import taxes for solar wafers and polysilicon, an essential component in solar panels, would double from 25 to 50 per cent, while certain tungsten products used in making electronics and semiconductors would be slapped with a new 25 per cent levy.
The new import duties will take effect on January 1, 2025, just weeks before Trump’s inauguration on January 20, and are meant to guard against China’s rising clean-energy prowess.
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Katherine Tai, the US trade representative, said the tariffs “will further blunt the harmful policies and practices” adopted by China, the world’s second-largest economy.
“These actions will complement the domestic investments made under the Biden-Harris administration to promote a clean-energy economy, while increasing the resilience of critical supply chains,” Tai added.
In 2023, China produced 80 per cent of the world’s tungsten. None is produced in the US, which is encouraging new investment, like reopening a mine in South Korea in 2024.
The US has accused Beijing of doling out massive state subsidies, flooding the global market with cheaper products to kill competition and stealing American technology through cyber theft and industrial espionage.
China “had changed some specific unfair measures”, the USTR said on Wednesday, but “harmful forced” technology transfer practices “have continued and in some instances worsened”.
The Chinese embassy in Beijing did not immediately respond to a request for comment.
On Thursday, the US-China bilateral economic working group is set to meet on the sidelines of a Group of 20 gathering in Johannesburg, South Africa, and the financial working group will convene in Nanjing on December 15 and 16.
The American side is expected during both gatherings to raise alleged Chinese overcapacity in green technology.
US Treasury Secretary Janet Yellen on Wednesday said “it’s critical to have open channels” between the world’s two largest economies.
Beijing was expected to retaliate if even higher tariffs were imposed on China-made goods by the next administration, she added, calling the Biden administration’s approach to tariffs “strategic”.
Yellen said almost all economists agree that broad-based tariffs will “hurt us by raising prices, possibly substantially, and making it more expensive for firms that need inputs from China to be able to acquire them and harm our competitiveness of firms that rely on those imports”.
“So we’ve taken this strategic approach, focusing narrowly”, she added.
Wednesday’s announcement comes a day after the departing American president in a speech reviewing his economic policy criticised his predecessor and successor over his use of tariffs.
Biden on Tuesday said Trump “seems determined to impose steep, universal tariffs on all imported goods brought to this country in a mistaken belief that foreign countries will bear the cost of those tariffs, rather than the American consumer”.
“I believe this approach is a major mistake,” Biden added. “I believe we’ve proven that approach is a mistake over the past four years.
Trump initiated America’s trade war with China in 2018, imposing additional 25 per cent tariffs on over US$300 billion worth of mainland imports.
When Biden took office in 2021, he kept in place most of the Trump-era duties, raising tariffs on certain products like electric vehicles to 100 per cent and on solar cells to 50 per cent in May this year.
During Biden’s four-year term, relations between Beijing and Washington have deteriorated further, owing to the president’s export restrictions on cutting-edge American technology reaching China and its military.
Last week, the US Commerce Department expanded existing export controls on chipmaking equipment produced by American companies at foreign facilities.
In response, Beijing banned the export of key dual-use materials gallium, germanium and graphite that are vital for military and civilian technologies.
Meanwhile, Trump has already promised to sign an executive order on his first day in office to impose additional 10 per cent tariffs on all mainland imports.
During his 2024 campaign, he pledged up to 60 per cent tariffs on China-made goods along with 10 per cent tariffs on all other imports into the US.
During an NBC interview aired on Sunday, Trump suggested tariffs could be “used properly” to avoid wars and fight domestic crises.
“They cost Americans nothing. They made a great economy for us,” said Trump, adding that “I have stopped wars with tariffs”.
The president-elect also claimed that in his first term he struck a deal with Chinese President Xi Jinping on America’s opioid crisis, adding that “Biden didn’t, unfortunately, finish that discussion up”.
The US has sought help from Beijing to block the flow of drug precursors from China. But Beijing cut off of assistance in 2022 after then-House speaker Nancy Pelosi visited Taiwan.
Cooperation was restored after Xi and Biden met last year in San Francisco, leading to the creation of working groups to stabilise ties and maintain communication.
More from South China Morning Post:
- Biden touts his economic legacy and calls Trump’s planned tariffs a ‘major mistake’
- US-China ties under Donald Trump: first year of his presidency is crucial, says scholar
- Donald Trump’s export controls hurting China could rankle US allies: analysts
- US must engage China’s ‘wickedly competitive’ hi-tech firms: trade group leader
- WTO chief urges likes of Singapore to defend global system ahead of new US-China trade war
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