On May 14, 2024, President Joe Biden announced major increases in tariffs on a wide range of Chinese products relating to certain key strategic industries, including solar cells, batteries, battery materials, electric vehicles, semiconductors, steel and aluminum, among other goods. The Biden administration's move affects industries in which the U.S. has invested huge sums of money and that his administration has targeted for growth, stating that he is "determined to ensure America leads the world in them." A detailed analysis of these tariff-related actions and other ones that the Biden administration has recently taken against China will be addressed in a forthcoming Duane Morris Alert.
The Biden administration's actions are the result of a statutorily required review conducted by the Office of the U.S. Trade Representative (USTR) during the past two years of Section 301 tariffs on a wide range of Chinese goods that were enacted during the Trump administration. Now, not only is the Biden administration keeping the vast majority of Section 301 tariffs in place that Biden criticized during his 2020 presidential candidacy, he has significantly increased the Section 301 tariffs on numerous kinds of Chinese products.
Some of the key Section 301 tariff increases include:
- Electric vehicles: from 25 percent to 100 percent in 2024;
- Semiconductors: from 25 percent to 50 percent by 2025;
- Lithium-ion batteries used in electric vehicles: from 7.5 percent to 25 percent in 2024;
- Solar cells imported: from 25 percent to 50 percent in 2024;
- Steel and aluminum products: from zero-7.5 percent to 25 percent in 2024; and
- Ship-to-shore container cranes: from zero to 25 percent in 2024.
Some of these increases are delayed in an apparent effort to allow domestic companies time to increase production to compete with China.
As Biden signed a memorandum ordering the increased tariffs at the White House, he accused China of unfair trade practices. U.S. officials said in a fact sheet given out before the announcement:
China's forced technology transfers and intellectual property theft have contributed to its control of 70, 80 and even 90 percent of global production for the critical inputs necessary for our technologies, infrastructure, energy and health care—creating unacceptable risks to America's supply chains and economic security.
"Bottom line: I want fair competition with China, not conflict," Biden said before signing a memorandum.
Some industry groups, politicians and environmentalists praised Biden's decision. "As America works to build out manufacturing in key clean energy supply chains to reduce the country's reliance on China's supply chains, we need to use every tool at our disposal to boost the U.S. solar manufacturing industry," said Mike Carr, executive director of the Solar Energy Manufacturers for America Coalition, in a statement. "The administration made the right decision to strengthen protections for solar components we seek to build in the U.S."
Others criticize the move, such as economists who oppose tariffs because they effectively act as a tax on domestic consumers, who will pay the higher prices. Colorado Governor Jared Polis posted on X that "[t]his is horrible news for American consumers and a major setback for clean energy. Tariffs are a direct, regressive tax on Americans and this tax increase will hit every family." Others have pushed back against the move by claiming that it hurts Biden's climate goals.
Under the Trump administration, the USTR established a Section 301 exclusion request process and granted hundreds of exclusions from among the thousands of requests that were submitted. While the current USTR has allowed a limited number of those exclusions to continue, many of them are due to end in the near future, and it is unclear as to whether they will be further extended. On a more positive note, in the report that it recently issued in connection with its Section 301 review, the USTR has recommended that a new exclusion process be established that would target machinery used in domestic manufacturing, among other things.
About Duane Morris
Duane Morris has substantial experience counseling energy companies, including renewable energy companies in the battery storage, wind, solar, geothermal, hydroelectric and transportation industries, helping them stay in compliance with various regulations and litigating disputes.
Attorneys in the firm's International Group have considerable experience in assisting clients in developing supply chain diversification and duty-saving strategies.Toward this end, Duane Morris attorneys have prepared numerous Section 301 product exclusion requests that were granted by the USTR.
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