By Ellen Zhang and Sarah Wu
BEIJING (Reuters) – U.S. President Joe Biden is expected to announce new tariffs on China as early as Tuesday, targeting sectors such as electric vehicles, medical supplies and solar equipment, according to people familiar with the matter.
The expected measure from the Biden administration comes before the November presidential elections. Biden, a Democrat seeking re-election, has taken a tough approach to China that would maintain existing tariffs on many Chinese products established by former President Donald Trump, his expected Republican opponent.
The impact on Chinese industries, however, is expected to be limited.
DOES CHINA EXPORT EVS TO THE UNITED STATES?
Very little. In the first quarter, Geely was the only Chinese automaker to export to the United States with 2,217 cars, according to data from the China Passenger Car Association.
Geely, which has sold some electric vehicles in the U.S. market under the Polestar brand, did not immediately respond to a request for comment. China’s Geely and Sweden’s Volvo Cars founded electric vehicle maker Polestar Automotive, which makes most of its cars in China. Volvo is majority owned by Geely.
Polestar CEO Thomas Ingenlath told Reuters last month that the company is accelerating efforts to produce more vehicles outside of China. Polestar aims for a sales split of 40% in Europe, 30% in the United States and 30% in the Asia-Pacific region, he said.
Ingenlath told Reuters last year that Polestar will begin production in South Carolina for the U.S. and European markets starting in 2024.
ARE THE NEW TARIFFS A THREAT TO CHINA’S SOLAR INDUSTRY?
The market is small for China and exports to the United States have been subject to tariffs for more than a decade. Other fees have also recently been imposed on several Chinese solar panel manufacturers who finished their panels in Southeast Asia.
More than 80% of solar panel manufacturing now occurs in China, and the cost of manufacturing a panel in China is 60% cheaper than in the U.S., according to the Center for Strategic and International Studies, a Washington think tank. .
Last year, China exported $3.35 million worth of solar cells to the US, less than 0.1% of China’s total exports. Shipments of completed solar panels to the US totaled US$13.15 million in 2023, just 0.03% of China’s solar panel exports.
Industry observers said the equipment to produce solar panels involves a complicated supply chain. How the new U.S. tariffs will affect sales of that equipment will depend on the details of the U.S. trade tax, they said.
WHAT ABOUT MEDICAL SUPPLIES?
Medical supplies made in China, such as syringes and personal protective equipment, also face additional tariffs from the US, sources familiar with the decision said.
According to WTO data, China exported $30.9 billion worth of medical products to the United States in 2022, representing about a fifth of China’s global medical product exports.
The expected tariffs are part of the Biden administration’s broader strategy to protect the U.S. against supply shortages seen during the pandemic that have left hospitals scrambling to find critical equipment, the sources said.
In December, the United States Trade Representative announced a further extension of China-related “Section 301” tariff exclusions until May 31.
The American Medical Manufacturers Association has called for the repeal of these exclusions, arguing that they are no longer necessary to deal with a COVID-19 emergency. The association says American manufacturers need the opportunity to compete with imports on a more level playing field.
MORE TARIFFS ON METAL PRODUCTS?
Biden also called in April for a tripling of U.S. tariffs on Chinese metal products. That would apply to more than $1 billion worth of steel and aluminum products, a U.S. official said.
(Reporting by Ellen Zhang and Sarah Wu in Beijing; additional reporting by Andrew Silver in Shanghai and Qiaoyi Li in Beijing; editing by Jacqueline Wong)
