After criticizing former president Donald Trump for promising to amp up tariffs on imports if he wins the 2024 election, the White House on Tuesday announced its own round of tariffs targeted at a variety of Chinese good.
President Joe Biden has said Trump’s ideas would worsen inflation, because the tariffs the Republican has proposed would simply be passed on to consumers in the form of higher prices. But Biden administration officials claimed Biden’s own new tariffs were so narrowly targeted they would avoid that.
“There’s no inflationary impact on these actions,” a senior administration official told reporters on a press call. “They’re mainly targeting strategic sectors where we are ramping up domestic investment.”
That distinction may be key. Biden kept most of Trump’s China tariffs in place when he took office — despite saying Trump was “going after China the wrong way” by imposing them — leading critics to charge him with hypocrisy. Now, the White House is trying to avoid being seen as flip-flopping or following Trump’s lead in the free trade debate while still hitting China.
With the exception of electric vehicle batteries, though, the new Biden tariffs would affect sectors that don’t make up a significant portion of the U.S. economy, economists say.
“The tariffs announced today on US imports from China won’t cause much direct economic damage since trade in the affected goods is already low. But US economic sanctions on China seem to act like a ratchet: they only ever get tighter,” wrote Mark Williams, chief Asia economist with Capital Economics, an analytical and consulting firm, in a client note.
With the tariffs expected to hit only about $18 billion worth of goods in a $25 trillion economy, “You’re not going to have a big impact on anything in the macro economy,” said economist Doug Holtz-Eakin, president of the conservative think tank the American Action Forum.
The tariffs’ inflationary impact would be a “rounding error,” said Jennifer Harris, who was a senior economics director for the National Economic Council and the National Security Council in the Biden White House until early 2023.
“Even versions of it that would have been more sprawling than where they landed, I have modeled, and [I] feel comfortable even those would have been rounding errors,” she said.
The highest-profile target of the new tariffs is electric vehicle batteries. According to Capital Economics, the U.S. imported about $14 billion annually in lithium-ion EV batteries in 2023 from China.
In comparison, the U.S. imported less than $500 million of solar cells and electric vehicles from China in the same year.
Biden’s tariffs would hit those sectors sharply. He was able to impose them under a trade law aimed at preventing countries from dumping products, selling them below-cost in order to dominate the market, then ramping prices back up.
The tariff rate — the percentage of the price tacked on to let a good into the country — would rise from 7.5% for lithium-ion EV batteries to 25% this year, while non-lithium-ion batteries would similarly rise in 2026.
Tariffs on electric vehicles would rise from 25% to 100%, while those on solar cells would go up from 25% to 50%. Other Chinese goods, such as steel, the cranes used to unload ships at docks, personal protective equipment used by health care workers and semiconductors, would also see tariffs rise to 25% or 50%.
While those may seem high, they pale in comparison to what Trump has proposed. The former president has suggested a 10% tariff on all imported goods and a higher 60% tariff on all Chinese imports.
Lael Brainard, director of the White House’s National Economic Council, told reporters on a press call that Trump’s tariffs would cost American families about $1,500 per year.
Still, the Biden tariffs could invite some degree of retaliation by China and will boost prices in the specific sectors they hit.
Williams wrote that Tesla, the American EV manufacturer, could be vulnerable to a Chinese tit-for-tat because its supply chain is heavily dependent on Chinese inputs.
But China also has a political incentive to go with a more measured response.
“More broadly, while some targeted response is probable, it is likely to be smaller in scale than today’s measures, allowing China to castigate the US as protectionist and to cast itself as a defender of free and open global trade,” he wrote.
Holtz-Eakin said both the Biden and Trump tariffs distorted trade and were hard to defend as good for American consumers, though Biden’s were narrower in scope.
“We’re going to protect U.S. surgical glove makers. I’m so relieved,” he said with sarcasm.
“You’re going to raise the prices for people who consume those things. Of course the question is why would you ever want to do that? I don’t have a good answer for that.”
Harris said Biden’s protective equipment and computer chip tariffs were likely put in place with an eye toward avoiding a repeat of the shortages seen during the start of the COVID-19 pandemic and incentivizing domestic production of those goods.
“We could have gotten kids back to school faster than we did had we been able to make high-quality masks. There is something to learning and putting in place stockpiles for the next pandemic that is at work in today’s announcement,” she said.
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