According to Bloomberg, the administration of US President Joe Biden is preparing to announce a sweeping decision on tariffs against China next week that is expected to target key strategic sectors and reject the across-the-board increases sought by Donald Trump, citing people familiar with the matter.
The decision is the result of a review of the Section 301 tariffs, which were first introduced under Trump in 2018. The new tariffs will focus on sectors such as electric vehicles (EVs), batteries and solar cells, while existing taxes will largely remain in place.
While the yuan weakened on the news, the CSI 300 index of Chinese stocks rebounded after falling 0.6% in early trading.
Biden had also called for tariff increases on steel and aluminium
An announcement is expected on Tuesday, sources said.
Although the decision is likely to be delayed, it will still be one of the biggest moves in the US economic competition with China.
The new tariffs follow Biden’s call last month to increase tariffs on Chinese steel and aluminium, and the formal launch of a new investigation into China’s shipbuilding sector.
The move comes after Biden last month proposed new 25% tariffs on Chinese steel and aluminium as part of a series of steps to shore up the American steel industry and wink at workers in an election year.
The promise is seen as largely symbolic as China currently exports very little of either metal to the US.
Chinese foreign ministry responds and calls for tariffs to be lifted
China’s Foreign Ministry said the tariffs imposed by the previous US administration had “seriously disrupted” economic and trade exchanges between the two countries.
The ministry called on Washington to lift the restrictions, adding that China would take necessary measures to defend its rights and interests.
“The US has continued to politicise economic and trade issues instead of correcting its mistakes,” ministry spokesman Lin Jian told a regular briefing on Friday. Raising tariffs further is adding insult to injury,” Lin Jian said.
New tariffs will not take effect immediately
According to Bloomberg, the tariffs will not have an immediate impact on Chinese companies because the world’s leading EV manufacturers are staying away from the US market because of the tariffs.
Solar companies, on the other hand, mostly export to the US from third countries to avoid restrictions, and US companies also want higher tariffs on this trade.
China factor in the US election
Biden and Trump are vying to appear tough on China as they head into a November election rematch, Bloomberg reported.
Last month, Biden signed a bill that started the countdown for video-sharing platform TikTok to spin off from its Chinese parent ByteDance or leave the US market.
If re-elected, Trump has promised to raise tariffs on China across the board, imposing a 60 per cent tax on all goods imported from China.
Many Democrats oppose this approach, saying it would raise prices for US consumers already struggling with inflation.
