China's  home-made BYD EV with the UEFA logo in front of the Allianz Arena soccer stadium in Munich together with the winner's trophy, Henri Delaunay Cup. (PHOTO: VCG)

By TANG Zhexiao

On May 14, the Biden administration announced sharp tariffs on an array of Chinese imports, including electric vehicles (EV), lithium-ion batteries, solar cells, critical minerals, semiconductors, steel and aluminum products, and cranes.

The notable hikes include tariffs on certain steel and aluminum products from 0-7.5 percent to 25 percent in 2024, from 25 percent to 100 percent on EVs in 2024, and from 25 percent to 50 percent on semiconductors by 2025. The new measures will affect 18 billion USD of Chinese imports.

In addition to hiking tariffs, the Office of the U.S. Trade Representative also recommended increasing U.S. Customs and Border Protection's Section 301 enforcement capabilities with additional funding, encouraging U.S. companies to shift supply chains away from China.

In June 2019, during Donald Trump's presidency, Joe Biden had posted on Twitter, now known as X: "Trump doesn't get the basics. He thinks tariffs are being paid by China. Any freshman econ student could tell you that the American people are paying his tariffs."

However, five years later, as President Biden, he decides to impose tariffs on Chinese goods.

Why is the U.S. doing this? The indications are that it is worried about the competition from China.

European think tank Bruegel thinks Biden's decision on EVs and the timing is driven by domestic politics. It also says the measures go against the administration's green transition goals, which include tax breaks for EVs largely.

Meanwhile, as the tariffs are passed on to consumers, there are also concerns that the price hikes would negatively affect consumption.

Goldman recently noted that the 2018-2019 U.S. tariffs raised consumer prices, which were mostly borne by U.S. businesses.

 Though U.S. trade representative Katherine Tai said the revised tariffs were justified, it is risking an election-year standoff with Beijing as Biden woos American voters who give his economic policies low marks, Reuters commented. "The EV figure may have more political than practical impact in the U.S., which imports very few Chinese EVs," it added.

Local media echoed this view. CNN cited Citi's data showing that the U.S. currently receives just 1.1 percent of Chinese EV exports, accounting for less than 365 million USD.

Europeans expressed caution on tariffs on Chinese EVs. Swedish Prime Minister Ulf Kristersson said at a press conference in Stockholm that Sweden and Germany both agree that "it is a bad idea to start dismantling global trade."