Market Analysis

The Biden-Harris administration is expected to announce final plans this week for significant tariff increases on certain Chinese imports. However, if U.S. industry concerns are considered, many of these planned tariffs may be softened.

Industries ranging from electric vehicles to electric utility equipment have requested that the higher tariff rates be reduced, delayed, or abandoned, with an expansion of potential exemptions.

In May, President Joe Biden announced plans to quadruple tariffs on Chinese electric vehicles to 100%, double duties on semiconductors and solar cells to 50%, and introduce new 25% tariffs on strategic goods like lithium-ion batteries and steel to protect U.S. industries from Chinese overproduction.

The White House initially stated that the new tariffs would take effect on August 1, but implementation was delayed until September as the U.S. Trade Representative's office reviewed over 1,100 public comments. A final decision is expected by the end of August.

This decision marks the administration's first major trade move since Vice President Kamala Harris became the Democratic Party's presidential nominee following Biden's withdrawal in late July.

The situation is politically sensitive. Easing the tariffs could lead to criticism from Republicans, who may accuse Harris of taking a softer stance on China trade, especially as Trump has promised to impose heavy tariffs on Chinese imports during his campaign. On the other hand, proceeding with the original tariff hikes could lead to complaints about increased costs, even from some Democrats in Congress.

China has threatened retaliation against what it calls "bullying" tariff increases, with Foreign Minister Wang Yi suggesting that some in the U.S. are "losing their minds."

The U.S. decision is expected to coincide with a visit by U.S. National Security Adviser Jake Sullivan to meet with Wang in an effort to manage U.S.-China tensions as the November U.S. election approaches.

Tariffs on Cranes and Syringes
The Biden-Harris tariffs include a new 25% levy on Chinese-made ship-to-shore cranes, a sector dominated by China with no U.S. producers. The Port of New York and New Jersey, which has eight cranes on order from China's state-owned ZPMC at $18 million each, warned that the 25% tariff would increase the cost of each crane by $4.5 million, putting significant strain on the port's limited resources.

Democratic senators Tim Kaine and Mark Warner from Virginia, along with Raphael Warnock and Jon Ossoff from Georgia, expressed concerns about the impact on ports in their states and called for exemptions on existing crane orders. Warnock and Ossoff also urged the USTR to reconsider the planned 50% tariff on syringes, warning that it could disrupt supplies for those used to feed newborn infants.

Ford Motor (NYSE) requested that the USTR reduce proposed tariffs on artificial graphite, a critical material for electric vehicle battery production, noting that the company still relies almost entirely on Chinese secondary-particle graphite.

Autos Drive America, a group representing foreign-brand automakers, asked that tariffs on batteries, modules, cells, and critical minerals remain stable through at least 2027 to support U.S. production investments and encourage consumer adoption of electric vehicles.

Calls for Extended Steel Duties
Some companies have called for more extensive Section 301 tariffs, particularly on Chinese steel, which Biden has proposed increasing to 25% from 7.5%.

Finnish stainless steelmaker Outokumpu, which operates a mill in Alabama, expressed support for the increase and advocated for extending it to all steel products melted and poured in China but processed in other countries, such as Vietnam, to prevent tariff circumvention. The company also suggested that the higher tariffs should apply to other stainless steel products, such as cutlery and refrigeration and brewery equipment.

Paraphrasing text from "Reuters" all rights reserved by the original author.