Policy & Regulation

U.S. delays new China tariffs for at least two weeks

U.S. delays new China tariffs for at least two weeks
(Photo by Venti Views on Unsplash)

The U.S. Trade Representative’s (USTR) office said that previously announced tariffs on Chinese goods, which impact solar components, electric vehicles, and battery storage imports, will be delayed for at least two weeks after it received more than 1,000 public comments.

The tariffs, which were announced in May after direction from President Biden, also target goods like steel and aluminum, semiconductors, critical minerals, and ship-to-shore cranes. They were originally supposed to go into effect August 1, but USTR said it needed time to review all comments before issuing a final determination, and the tariffs will take effect approximately two weeks after the determination is made public.

In making its decision to direct USTR on the tariffs, the White House cited China’s “unfair trade practices” concerning technology transfer and intellectual property, as well as its “flooding” of global markets with “artificially low-priced” exports.

Following the White House’s initial announcement, it said it will remove the tariff exemption for bifacial modules and take additional actions to address what it calls China’s “unfair” trade practices.

Bifacial solar panels generally used in utility-scale solar projects are not currently subject to safeguard tariffs under Section 201 of the Trade Act of 1974. After the Trump administration implemented an exclusion for bifacial modules, they now make up almost all U.S. solar panel imports, the White House said.

Episode 78 of the Factor This! podcast features Christian Roselund, a senior policy analyst at Clean Energy Associates, who breaks down the impact of the newest attempt to tamp down China’s solar dominance. Subscribe wherever you get your podcasts.

Solar cells

The tariff rate on solar cells (whether or not assembled into modules) will increase from 25% to 50% in 2024 under the proposed changes.

The White House argues this tariff will protect against China’s “policy-driven overcapacity that depresses prices” and inhibits the development of solar capacity outside of China. China has control of 80 to 90% of certain parts of the global solar supply chain, the White House said.

Steel and aluminum

The tariff rate on certain steel and aluminum products under Section 301 will increase from 0–7.5% to 25% in 2024.

The White House cited China’s policies and subsidies for its domestic steel and aluminum industries, which it says undercuts U.S.-made products with “artificially” low-priced metals made with carbon-intensive processes.

Semiconductors

The tariff rate on semiconductors will increase from 25% to 50% by 2025.

The White House estimates that if left unchecked, China would account for almost half of all new capacity coming online to manufacture certain legacy semiconductor wafers.

Electric vehicles

The tariff rate on electric vehicles under Section 301 will increase from 25% to 100% in 2024.

China’s exports of EVs grew by 70% from 2022 to 2023, the White House said.

Batteries, Battery Components and Parts, and Critical Minerals

The tariff rate on lithium-ion EV batteries will increase from 7.5%% to 25% in 2024, while the tariff rate on lithium-ion non-EV batteries will increase from 7.5% to 25% in 2026. The tariff rate on battery parts will increase from 7.5% to 25% in 2024.

The tariff rate on natural graphite and permanent magnets will increase from zero to 25% in 2026. The tariff rate for certain other critical minerals will increase from zero to 25% in 2024.

China currently controls over 80% of certain segments of the EV battery supply chain, particularly upstream nodes such as critical minerals mining, processing, and refining, the White House said.