President Biden, on May 14, 2024, announced significant tariff hikes in tariffs of solar cells, lithium-ion EV batteries, EVs, critical minerals and some other products that originate in China. He has directed his Trade Representative to increase tariffs of certain products under Section 301 of the Trade Act of 1974, that amount to $18 billion of imports from China.

This decision comes after a review conducted by the Trade Representative under section 301 of the Trade Act of 1974 on China’s practices related to technology transfer, intellectual property, and innovation (section 301 investigation). Following this, the Trade Representative has been directed to publish a proposed list of products and corresponding tariff increases for comments and consultation, and then finally publish a final list of products and tariff increases, if any.

Increased rates of duty for certain products from China are given below:

  • Battery parts (non-lithium-ion batteries): Increase rate to 25 percent in 2024;
  • Electric vehicles: Increase rate to 100 percent in 2024;
  • Lithium-ion electrical vehicle batteries: Increase rate to 25 percent in 2024;
  • Lithium-ion non-electrical vehicle batteries: Increase rate to 25 percent in 2026;
  • Natural graphite: Increase rate to 25 percent in 2026;
  • Other critical minerals: Increase rate to 25 percent in 2024;
  • Permanent magnets: Increase rate to 25 percent in 2026;
  • Semiconductors: Increase rate to 50 percent in 2025;
  • Solar cells (whether or not assembled into modules): Increase rate to 50 percent in 2024

REGlobal’s Views: Global geopolitics and threat of energy insecurity have made governments focus on ensuring their secure supply chains. Thus, the United States and various other countries are focusing on improving their own domestic manufacturing capabilities in the solar and battery spaces and reduce their reliance on imports from certain nations (primarily China). Interventions in the form of custom duties to curb imports and tax credits and incentives to promote local products have been introduced. However, China is responsible for a bulk of solar cells and lithium-ion battery production, and the US still has a significant ground to cover to expand its manufacturing capabilities to the levels sufficient to meet its demand.