But despite targeting $18 billion in imports across new and already targeted sectors, analysts do not expect a major economic impact, assuming Beijing does not retaliate significantly.
So what will be the repercussions of his moves?
Biden’s EV, semiconductor and battery tariffs “will not have a noticeable impact on US inflation or GDP,” said economist Ryan Sweet at Oxford Economics.
There were already levies on Chinese EVs, causing automakers to avoid the US market — though the new increase takes the tariff level from 25 percent to 100 percent.
“Last year, China exported around $400 million in battery EVs to the US while the European Union exported nearly $7.5 billion to the US,” Sweet said.
Oxford’s model assumes China does not retaliate significantly, given the current weaknesses seen in the world’s second largest economy, he said.
Tianlei Huang, research fellow at the Peterson Institute for International Economics, believes tariffs could hurt some Chinese companies’ sales and profitability.
But “the direct impact of those tariff hikes is actually quite limited,” he told a virtual event. “It’s more of a signal.”
More restrictive trade policies can cause low-carbon technologies to be less competitive against rivals like combustion engine vehicles, according to research from the Center for Strategic and International Studies (CSIS).
But research scenarios found that “rising trade frictions didn’t overcome the still-falling costs of clean energy,” said Joseph Majkut, director of the energy security and climate change program at the think tank.
US policies like the Inflation Reduction Act, which puts funding towards supporting the green transition, will still support the creation of domestic content too, he added.
Beijing has warned it would “take resolute measures” to defend its interests.
Policymakers could target industries in US swing states to impact Biden’s election chances, or opt for a symbolic retaliation, the Trivium China policy analysis group said in a newsletter.
China’s response, or lack thereof, will be telling in terms of how officials plan to address acts they deem as “economic suppression” moving forward, Trivium added.
“The challenge for the Chinese is, how do they do it in a way that doesn’t freak out foreign businesses?” said Bill Bishop, who publishes the Sinocism newsletter.
With Beijing previously announcing export controls on two rare metals essential for the manufacture of semiconductors, action on critical minerals remains possible, he said.
Beijing-based economist Mei Xinyu expects the response to be targeted, and analysts generally do not expect tit-for-tat actions.
China does not import American EVs while “Beijing and Shanghai have been very supportive of the one major US EV player, Tesla, in the China market,” said Paul Triolo, partner for China at Albright Stonebridge Group.
Biden’s move “may accelerate pressure on the EU to adopt a similarly strong posture in its own China tariff review, which is forthcoming,” said CSIS senior fellow Emily Benson.
