Biden administration set to revamp Trump’s tariff program after multi-year review, sources say

Washington CNNThe Biden administration is set to unveil a sweeping restructuring of former President Donald Trump’s trademark tariffs on Chinese imports, according to sources familiar with the matter.

The announcement, expected as early as next week, would see tariffs dialed up significantly in some industries seen as strategic to the US economy and kept in place or dialed back in others deemed less critical to national security, the sources said.

Importers of electric vehicles, solar components and critical minerals made in China are likely to see those levies rise significantly – to as high as 100% in the case of electric vehicles, these sources said.

The changes come as President Joe Biden refines a campaign pitch based on protecting domestic industries from state-sponsored competition, while encouraging clean energy investments in the US that have become the pillars of his presidential platform.

The changes are the result of a mandatory review that the Office of the US Trade Representative began in 2022, two years after the US and China’s “Phase One” trade deal went into effect, formalizing the tariff levels that Trump was known to set on social media. Under US trade law, the economic impact and effectiveness of tariff programs must be studied and investigated every four years.

Adam Hodge, former aide at Biden’s National Security Council and the Office of the US Trade Representative, said the new tariffs – taken together with other policies enacted by Treasury and Commerce – should ease some anxiety among the electorate.

“The Biden administration has neutralized China as a campaign issue,” said Hodge, now a managing director at Bully Pulpit International.

Trump – Biden’s opponent in November and the architect of the existing tariff program that taxes some $300 billion in Chinese goods at US ports of entry – has proposed charging a 60% tariff on all goods coming from China and 10% on goods imported from everywhere else.

Biden’s proposal would represent a more curated approach, albeit an approach that is inherently a response to actions already initiated by his predecessor.

Some economists have warned that increased tariffs risk reigniting a trade war with China, hurting the US economy in the process. Tariffs are essentially a tax on US businesses and consumers, adding to the cost of imported goods. That could send inflation higher and hurt job growth.

Americans have paid more than $230 billion to date for tariffs that Trump imposed on imported solar panels, steel and aluminum and Chinese-made goods, according to US Customs and Border Protection. More than half of the duties have been collected during the Biden administration.

Strategic importance to the economy, in an election year, also carries political importance.

Both candidates have been campaigning across the manufacturing-heavy swing states known as the “blue wall” critical to both candidates’ prior election victories.

In an April speech in Pittsburgh, nicknamed “Steel City,” Biden called for the tripling of tariffs on imported steel, aluminum and shipbuilding materials – an effort to raise the cost of non-US products to promote American manufacturing and jobs.

The Biden administration had planned to release the results of the review in advance of the Pittsburgh speech, the sources familiar with the matter said, but ended up delaying the release.

The Office of the US Trade Representative now faces a deadline at the end of May to decide whether companies whose products had been granted exclusions from certain tariffs would see those exclusions extended or denied. The office did not immediately respond to a request for comment.

Treasury Secretary Janet Yellen discussed US concerns with China’s non-market practices in bilateral meetings with Chinese leaders in early April, concerns echoed by Secretary of State Antony Blinken in meetings later that month.

Yellen is planning to join other finance ministers in the Group of Seven nations representing the world’s wealthiest democracies in Italy at the end of May, where the group will discuss the agenda for the upcoming June summit in Puglia, Italy.

For more than a year, the Biden administration has been urging its allies in the European Union to place hefty tariffs on electric vehicles imported into the bloc, stressing the risk China poses to domestic car manufacturing and urging solidarity in standing up to a non-market economy.

“It’s important for the US to make this move in advance of the EU’s investigation into Chinese EVs,” said Clete Willems, partner at Akin Gump and former deputy director of the National Economic Council during the Trump administration. Willems said the US’ position as a first mover on EV tariffs would give the EU “air cover.”

The European Commission faces a July 4 deadline to decide how to proceed in its own investigation into electric vehicle subsidies.

The White House, Treasury Department and USTR declined to comment.