Beijing has vowed to take measures to protect Chinese firms’ interests after the United States finalized its tariff hikes on Chinese goods, including electric vehicles (EVs), batteries, solar panels, metals and medical tools.
The Office of the United States Trade Representative (USTR) said on September 13 that it will proceed with its previously proposed tariff hikes on imports from China after Section 301 tariff investigations.
From September 27 this year, the US will impose a 100% tariff on EVs and a 50% tariff on solar cells, syringes and needles imported from China. It will also impose a 25% tariff on China’s facemasks, battery parts (non-lithium-ion batteries) and lithium-ion EV batteries, critical minerals, ship-to-shore cranes and steel and aluminum products.
From the beginning of 2025, the US will impose a 50% tariff on semiconductors and medical gloves made in China. From the beginning of 2026, the US will impose a 25% tariff on China’s lithium-ion non-EV batteries, natural graphite and permanent magnets, a 50% tariff on facemasks and also a 100% tariff on medical gloves.
These tax hikes have been largely unchanged from those announced by the Biden administration on May 14, covering US$18 billion worth of imports from China.
The USTR said on September 13 that it made its decision after considering public comments and the advice of the interagency Section 301 committee and appropriate advisory committees over the past few months.
“China has repeatedly lodged serious representations to the US side on the Section 301 tariffs, and the WTO has already ruled that these tariffs violate its rules,” said a spokesperson of China’s Ministry of Commerce. “Instead of addressing this, the US has further increased tariffs on Chinese products, compounding its mistakes.”
The spokesperson said the US Section 301 tariff measure is typical unilateralism and protectionism that pushes up the prices of US imports while the costs are ultimately borne by US companies and consumers.
On September 12, the Chinese Commerce Ministry published its 2024 Report on World Trade Organization (WTO) Compliance of the US. The report expressed serious concern over perceived US abuse of Section 301 to raise tariffs on Chinese goods, asserting that the US is a “disrupter of global industrial and supply chains.”
It also criticized the US for undermining the multilateral trading system, engaging in unilateral trade bullying, applying double standards in industrial policy and disrupting the global industrial and supply chains through the politicization and weaponization of economic and trade issues by wielding a “tariff baton” under the guise of “de-risking.”
The China Council for the Promotion of International Trade (CCPIT) said that the Section 301 tariffs are against WTO rules and seriously undermine the confidence of relevant Chinese and US industries in long-term, stable cooperation.
Tech taxes
The Office of the USTR’s latest announcement said Chinese semiconductors that will be subject to a 50% import tariff include diodes, transistors, photosensitive semiconductors, processors and controllers, integrated circuits (memories, amplifiers and others) and parts of integrated circuits and microassemblies.
However, CITIC Securities said the US tariff hikes will not have a big impact on China’s semiconductor sector. It said China’s export of semiconductors to the US amounted to 22.7 billion yuan (US$3.2 billion), or only about 1.65% of China’s total exports of semiconductors of 13.78 trillion yuan in 2023.
Other analysts said Chinese solar product makers are suffering more from overcapacity than US tariff hikes.
“This round of tariff hikes will not affect China’s solar panel industry as there has been almost no direct export of solar panels from China to the US in the past 12 years,” Lu Jinbiao, deputy director of the expert committee of the silicon branch of China Nonferrous Metals Industry Association in Beijing, told Yicai.com.
He said since the US launched an anti-dumping investigation into Chinese solar batteries and modules in October 2012, Chinese suppliers have avoided extra US tariffs by relocating their production lines to Southeast Asian countries, including Cambodia, Thailand, Vietnam and Laos.
In June 2022, the Biden administration extended a tariff exemption for solar product makers in the four Southeast Asian countries by two years, as a way to give more time for US suppliers to build their production capacity domestically.
After the exemption expired on June 6 this year, US importers of solar products from the four countries now have to pay an extra 14.25% duty.
Lu said some Chinese solar product suppliers may stay in Southeast Asia while some others may move to the US to avoid extra tariffs. He told Caixinglobal.com in an interview that the bigger problem in China’s solar product sector is a price war triggered by overcapacity and weak global demand.
He said many Chinese solar product makers have turned from profit to loss after polysilicon prices fell to about 40,000 yuan per ton from 300,000 yuan per ton two years ago. He said prices of solar wafers, cells and modules have plummeted by more than 50% since the fourth quarter of last year.
Longi Green Energy Technology, China’s solar wafer producer, reported a net loss of 5.2 billion yuan in the six months ended June 30 this year, compared with a net profit of 9.2 billion yuan a year earlier.
TCL Zhonghuan Renewable Energy Technology, a solar cell maker, recorded a net loss of 3 billion yuan in the first half, compared with a 4.5 billion yuan profit in the same period of last year.
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