Exclusive-US blocks steep tariff hikes in China, many set to begin Sept. 27 By Reuters

By David Lawder

(Reuters) – The Biden administration blocked steep tariff hikes on Chinese imports on Friday, including a 100 percent tax on electric vehicles, to strengthen protections for strategic domestic industries against China’s state-mandated overcapacity.

The U.S. Trade Representative’s office told Reuters that many of the tariffs, including a 100 percent tax on Chinese electric vehicles, 50 percent on solar cells and 25 percent on steel, aluminum, electric vehicle batteries and key minerals, would go into effective September 27.

The USTR determination, first reviewed by Reuters, showed a 50 percent tax on Chinese semiconductors, which now includes two new categories — polysilicon used in solar panels and silicon wafers — is set to begin in 2025.

Adjustments to punitive “Section 301” tariffs on $18 billion worth of goods announced in May by President Joe Biden were minimal and ignored the auto industry’s demands for lower tariffs on graphite and key minerals needed for battery production for electric vehicles because they are still too dependent on the Chinese. supplies.

USTR left unchanged the tariff increase to 25% from zero on lithium-ion batteries, minerals and components, with the increase for electric vehicle batteries taking effect on September 27 and for all other devices, including laptops and mobile phones, on January 1. , 2026.

“TOUGH, TARGETED”

Lael Brainard, the White House’s top economic adviser, told Reuters the decision was made to ensure the US EV industry diversifies away from China’s dominant supply chain.

She said such “tough, targeted” tariffs are needed to counter China’s state-run subsidies and technology transfer policies that have led to overinvestment and excess manufacturing capacity. But Washington is investing hundreds of billions of dollars in its own tax subsidies to develop the domestic electric vehicle, solar and semiconductor sectors.

“The 100 percent tariff on electric vehicles reflects the very significant unfair cost advantage that Chinese electric vehicles in particular are using to dominate auto markets at an astounding rate in other parts of the world,” Brainard said. “That’s not going to happen here under the vice president and the president.”

China has vowed to retaliate against “bullying” tariff hikes and has argued that the success of its electric vehicle industry is down to innovation, not government support.

The higher US tariffs come into effect as Vice President Kamala Harris and former President Donald Trump both woo voters in auto and steel-producing states as they seek to be just as tough on China ahead of November’s presidential election. Trump has promised to impose 60% tariffs on all imports from China.

The European Union and Canada have also announced new import tariffs on Chinese electric vehicles, with the latter matching the 100% US duties.

PORT, MEDICAL AID

The final tariff decision provides some temporary relief for US port operators who were facing a new 25% tariff on massive ship-to-shore cranes, an industry China dominates without US manufacturers.

The tax would add millions of dollars to the cost of each crane. USTR said it will allow tariff exclusions for any Chinese port cranes that were ordered before the initial May 14 tariff announcements, as long as they are delivered by May 14, 2026.

The USTR raised the tariffs to 50 percent on medical face masks and surgical gloves, from the originally proposed 25 percent, but delayed their start to allow for a shift to non-Chinese suppliers. The planned tax on Chinese syringes, which have been in short supply during the COVID-19 pandemic, will immediately increase to 100% from the previously planned 50%, but the USTR will allow a temporary exclusion for enteral syringes, used to feed infants, for a period of time. year.

The agency also said it will consider requests for tariff exclusions for five categories of industrial machinery from China, including those for liquid purification or filtration machinery, industrial robots and printing machinery.

It will allow tariff exclusions for Chinese equipment to make solar wafers and cells, but not for equipment used to make complete solar modules.