May 30, 2024

The United States is reportedly set to hit China with a series of new tariffs targeting strategic areas, including electric vehicles and semiconductors.

The new tariffs could come as soon as Tuesday, according to multiple reports. Reuters reports that while the exact details of the tariffs (like specific categories and values) still need to be ironed out, they’re targeted at areas of interest aligned with national security and competitive areas.

Solar cells, semiconductors, EVs, and batteries are expected to be the focus of the new tariffs. Existing levies will be mostly maintained, Bloomberg News reports.

China’s Foreign Ministry told reporters Friday that tariffs imposed by the administration of former president Donald Trump “seriously disrupted” trade between the countries, according to Bloomberg. “To further increase tariffs is to add insult to injury,” a ministry spokesperson told reporters Friday during a briefing.

The expected tariffs would add to Western countries’ efforts to reign in China’s growing exports and dominance in multiple tech arenas, including the auto and semiconductor industries. On Tuesday, the U.S. Department of Commerce revoked export licenses to Huawei, China’s leading technology firm. Both Intel and Qualcomm have reportedly lost their licenses to sell Huawei their chips, which are used in the firm’s laptops and phones.

Chinese EVs steer westward

Chinese automakers, fueled by generous subsidies from Beijing, have become titans in the global market. The nation last year beat out Japan to become the world’s top exporter of cars, shipping out 4.91 million vehicles.

Meanwhile, the European Union has launched an investigation into China’s subsidies for local EV makers as the market continues to be “flooded” with cheap Chinese cars. About 19.5% of battery EVs sold in the E.U. last year, about 300,000 units, came from China., according to the European Federation for Transport and Environment.

But Chinese EV makers have largely avoided entering the U.S. market, driven away by the 27.5% tariff on Chinese-made vehicles. One of the few exceptions is Polestar, a Sweden-based luxury EV maker that is owned by China’s Geely. The U.S. has also banned EV battery materials from China and announced an investigation into Chinese-made smart cars.

“China is now simply too large for the rest of the world to absorb this enormous capacity,” U.S. treasury secretary Janet Yellen said last month during a visit to China. “Actions taken by the [People’s Republic of China] today can shift world prices. And when the global market is flooded by artificially cheap Chinese products, the viability of American and other foreign firms is put into question.”

U.S. officials are also concerned about reports that some Chinese auto giants are planning to build factories in Mexico. That includes BYD, MG Motor, and Chery. At least a dozen Chinese electric-car part suppliers have recently announced new factories or added to their existing investments in Mexico, The Wall Street Journal reported earlier this year.

“The introduction of cheap Chinese autos —which are so inexpensive because they are backed with the power and funding of the Chinese government — to the American market could end up being an extinction-level event for the U.S. auto sector,” the Alliance for American Manufacturing said in a Feb. 20 report.

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