Many US Manufacturers Don't Want Tariff Hikes on China Imports

A plan by Washington to crank up tariffs on Chinese imports ranging from electric vehicles and chips to syringes and cranes has now become a major headache for the Biden government, with most US manufacturers saying they were not in favour of such a move.

In May, the Biden Administration announced steep new tariffs on key imports from China — quadruple duties, amounting to 100%, on electric vehicles, 50% on chips and solar cells and 25% tariffs on lithium-ion batteries and other strategic goods.

US officials initially said the duties — that aimed to protect US producers from a flood of cheap products from China — would come into effect in August.

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But just two days before they were to come into effect, the US trade department said it was delaying tariffs until some time in September as they were studying more than 1,100 public comments.

The Trade Representative’s (USTR) office is supposed to make a final determination is due by the end of August, but submissions from industry representatives show US manufacturers are absolutely dependent on Chinese imports.

Heavy reliance on Chinese imports

For instance, Ford Motor, the second-largest automaker in the US, has asked USTR to reduce proposed tariffs on artificial graphite, a key material used in the production of anodes for electric vehicle batteries. Ford said it still “almost exclusively” uses Chinese secondary-particle graphite.

Similarly, Autos Drive America, a group representing foreign-brand automakers, has called for tariff rates on batteries, modules, cells, and critical minerals to be kept stable through at least 2027.

The group argues this would allow automakers to “fulfil investments in US production and to bolster consumer adoption” of EVs.

Newport Metals, a two-decade-old provider of raw materials for foundries argues its product magnesium anodes is made exclusively in China because the country “produces more than 85% of the world’s supply of magnesium”.

“There is no US industry to protect, so the tariff amounts to a tax that is ultimately paid by the users of gas, oil and water – virtually everyone who lives in the United States,” a company representative wrote in public comments.

The planned tariffs are not just getting pushback from private firms but even public entities in the US.

The Port of New York and New Jersey, for instance, has voiced concern about Washington’s plan to levy a 25% tariff on Chinese-made ship-to-shore cranes — a China-dominated sector with no US producers.

The port said it has eight cranes on order from China’s state-owned ZPMC at $18 million apiece. A 25% tariff would boost the cost of each by $4.5 million, “causing a significant strain on the Port’s critical and limited resources,” it said.

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Big dilemma ahead of big election

The pushback from US industry puts the Joe Biden-Kamala Harris Administration into politically tricky waters, with the national election approaching in November.

The decision on softening the tariffs — or not — is the administration’s first major trade decision since Vice President Harris emerged as the Democratic Party’s presidential nominee after Biden stepped aside in late July.

If it decides to dial back the duties, it would give Republicans ammunition to argue that Harris will take a softer stand on China trade.

That would be crucial at a time when Trump has vowed to hit Chinese imports with hefty tariffs.

At the same time, proceeding with the original hikes would draw complaints about higher costs, even from some Democrats in Congress.

Several democratic senators, such as Tim Kaine and Mark Warner from Virginia and Raphael Warnock and Jon Ossoff from Georgia have raised concerns about the impact of new levies Chinese cranes on ports in their states.

The senators are calling for existing orders for Chinese cranes to be exempted.

Senators Warnock and Ossoff also urged USTR to reconsider a planned 50% tariff on syringes imported from China, saying they could disrupt supplies for those used to feed newborn infants.

Steelmakers demand higher tariffs

There are some companies, meanwhile, that are demanding more extensive Section 301 tariffs, including for Chinese made steel. The Biden government proposed to increase those tariffs to 25% from 7.5%.

Finnish stainless steelmaker Outokumpu, which operates a mill in Alabama, said it supported the increase. It wants levies to extend to all steel products melted and poured in China and processed in other countries, such as Vietnam, to curb tariff circumvention.

The steelmaker also said the higher tariffs should extend to other stainless steel categories, such cutlery and refrigeration and brewery equipment.

China, meanwhile, has vowed retaliation against the “bullying” tariff hikes.

Chinese Foreign Minister Wang Yi said the planned tariffs showed that some in the US may be “losing their minds.”

The final US decision on tariffs is now expected to come in the same week that US National Security Adviser Jake Sullivan is set to meet with Wang in a visit aimed at keeping US-China tensions in check ahead of the November election.

Reuters, with additional editing and inputs from Vishakha Saxena

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]