BANGKOK — The Biden administration is set to increase tariffs on various solar products and tungsten items imported from China as a measure to protect U.S. clean energy industries.
A recent announcement from the U.S. Trade Representative (USTR) indicated that tariffs on solar wafers and polysilicon from China will escalate from 25% to 50%, while certain tungsten product tariffs will rise from zero to 25%. These changes are scheduled to take effect on January 1 and stem from an examination of Chinese trade practices under Section 301 of the Trade Act of 1974.
This decision follows a public consultation phase that took place after the USTR revealed its intention to consider such actions back in September. USTR Katharine Tai commented that these tariff increases aim to counteract the detrimental trade policies enforced by China. She added that these measures are intended to bolster domestic investments geared towards fostering a clean energy economy and enhancing the resilience of essential supply chains.
Reports have emerged regarding ongoing trade discussions between U.S. and Chinese officials taking place this week, with further meetings scheduled before the end of the year.
Meanwhile, China’s Commerce Ministry expressed discontent over the recent approval by the U.S. House of Representatives of a defense budget bill. This legislation allocates $3 billion towards the removal of telecommunications equipment from Chinese companies like Huawei and ZTE from U.S. networks. Ministry spokesperson He Yadong firmly criticized the U.S. narrative that Chinese telecommunications products pose a security threat, categorizing it as unfounded. He urged the United States to respect factual details and cease the politicizing of trade relations, assuring that China would undertake necessary measures to defend its business interests.
In a related development, the U.S. recently tightened restrictions on advanced semiconductor technology transactions with China. In retaliation, China has prohibited the export of vital minerals used in chip production, including gallium, germanium, and antimony, and has imposed additional restrictions on graphite exports to the U.S.
The United States has been striving to secure alternative sources for these critical materials, primarily found in China, by looking into suppliers in Africa and other regions. Tungsten—a crucial metal that is largely produced in China and is not manufactured in the U.S.—also fits into this strategic component. Although South Korea could serve as a significant supplier, U.S. imports of tungsten from China noticeably declined from $19.5 million to $10.9 million in 2023.
Trade tensions are becoming increasingly pronounced as President-elect Donald Trump approaches his inauguration, having threatened to impose tariffs as high as 60% on Chinese imports. President Biden has critiqued such broad tariffs as ill-advised, yet his administration has retained the tariffs instituted during Trump’s presidency while adopting a more focused strategy.
As the Biden administration drives initiatives to bolster U.S. production of electric vehicles, solar panels, and batteries, it faces competition from China’s significant increase in the production of low-cost versions of these products. U.S. and allied nations argue that China unfairly subsidizes its exports, allowing its manufacturers to dominate international markets by offering lower prices due to government support. Additionally, it has been claimed that Chinese firms often pressure foreign corporations into technology-sharing agreements.
Currently, China encompasses over 80% of the global solar panel production market at all levels, which is more than double the domestic demand for such products within the country. While China’s economies of scale have made solar power more affordable, they have also led to a concentration of the supply chain within the nation. The International Energy Agency (IEA) has recommended that countries review their solar panel supply chains and devise plans to mitigate potential risks.
Back in early 2018, the Trump administration enforced 30% tariffs on Chinese solar panel imports, which prompted Beijing to file a complaint with the World Trade Organization alleging unfair U.S. support for electric vehicle purchases.
The USTR’s investigation that resulted in the new tariffs on solar products concluded with a May report, which incited tariff hikes on a diverse range of items, including electric vehicles, medical supplies, semiconductors, and various metals. Consequently, tariffs for Chinese electric vehicles have surged to 100% from 25%, while tariffs on lithium batteries imported from China have been raised to 25% from 7.5%.
