US counters China with major tariffs (and investments) in steel and aluminum

In a statement released on May 14, the White House outlined a series of actions to address what it calls China's "unfair trade practices." These include forced technology transfer, intellectual property theft, and government subsidies that distort markets.
In a bid to level the playing field for American businesses struggling with artificially low-priced Chinese competition, the plan prioritizes increased tariffs on $18 billion worth of goods imported from China, including steel and aluminum.

'To encourage China to eliminate its unfair trade practices regarding technology transfer, intellectual property, and innovation, the President is directing increases in tariffs across strategic sectors such as steel and aluminum, semiconductors, electric vehicles, batteries, critical minerals, solar cells, ship-to-shore cranes, and medical products.'

Protecting the US domestic steel and aluminum production

The plan specifically targets China's trade practices in the steel and aluminum industries, sectors that are crucial to the American economy.

The tariff rate on certain steel and aluminum products under Section 301 will increase from 0–7.5% to 25% in 2024. The announcement emphasizes that lower-priced Chinese products are often produced with higher emissions, putting American high-quality, low-emissions steel and aluminum products at a disadvantage.

However, the plan goes beyond just tariffs. The Biden administration is also investing heavily in the future of American steel and aluminum production: $6 billion has been allocated for clean manufacturing projects, including the construction of the first new primary aluminum smelter in four decades. 

'These investments will make the United States one of the first nations in the world to convert clean hydrogen into clean steel, bolstering the U.S. steel industry’s competitiveness as the world’s cleanest major steel producer.'

 

Countering China: tariffs across strategic sectors 

The Biden administration isn't stopping at steel and aluminum. To combat China's trade practices, tariffs are rising across various critical sectors. Semiconductor tariffs will jump from 25% to 50% by 2025, electric vehicles will face a steep increase from 25% to 100% in 2024, and batteries along with critical minerals will see hikes ranging from 7.5% to 25%. This strategy, backed by billions in domestic manufacturing investments, aims to strengthen American competitiveness in industrial production, clean energy, and technology by securing vital supply chains.

The price of fairness

The jury is still out on the long-term effects. While these tariffs aim to reduce improper trade practices, they could potentially lead to price increases for American consumers. Additionally, China might respond with counter-tariffs, further complicating the situation. 

In the picture, U.S. President Joe Biden is shown in a virtual discussion with Chinese President Xi Jinping in March 2022.

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