The Biden administration recently released the findings of its investigation into the Trump-imposed Section 301 tariffs on China. Despite acknowledging the economic harms caused by the tariffs and the lack of significant improvement in Chinese IP practices, the administration recommended maintaining Trump’s tariffs on roughly $360 billion worth of goods and imposing significant hikes on an additional $18 billion worth of goods.
The Section 301 case that led to the tariffs concerned China’s intellectual property practices. Upon finding that these practices were discriminatory and burdening U.S. commerce, the Trump administration imposed tariffs on Chinese goods. The tariffs were then expanded to cover another $200 billion after China retaliated against the first tranche.
However, the latest tariff hikes on China suffer from the same procedural, political, and policy problems. Section 301 does not give the executive the authority to arbitrarily hike tariffs; the tariffs imposed are supposed to be a measured response to the harms uncovered in the investigation. Abusing executive authority to impose arbitrary tariff hikes on “strategic goods” only paves the way for more abuses of executive tariff authority in the future.
Biden is increasing the following tariffs: Steel and aluminum from 0-7.5 percent to 25 percent, Semiconductor from 25 percent to 50 percent, EVs from 25 percent to 100 percent, Battery and components from 0-7.5 percent to 25 percent, Natural graphite and permanent magnets tariffs from 0 percent to 25 percent, Solar cells from 25 percent to 50 percent, Ship-to-shore cranes from 0 percent to 25 percent, Medical syringes and needles from 0 percent to 50 percent, Respirators, face masks, and rubber medical and surgical gloves from 0-7.5 percent to 25 percent.
The policy argument for higher EV tariffs claims the U.S. needs more tariffs to be on a level playing field with China so that we can develop our own capacity. However, the economic evidence so far is that the Trump-Biden tariffs have failed in their aims to boost U.S. manufacturing or to prevent China from becoming even more aggressive in its IP practices.
In conclusion, calling the latest round of tariffs “strategic” does not change the underlying reality: these policies are just another form of protectionism, and therefore, subject to all the same economic problems. Quadrupling down on a failed policy is a political decision, not an economic one. As a tax attorney, I urge individuals and businesses to understand the implications of these tariffs and make informed financial decisions.