Biden administration ratchets up tariffs on Chinese goods

WASHINGTON — The Biden administration on Friday announced measures that will add tariffs to Chinese products worth tens of billions of dollars, a move intended to protect U.S. factories and project a tough-on-China approach before the presidential election.

The tariffs, which range from 7.5% to 100%, will apply to clothing, solar panels, electric vehicles, syringes, steel and other goods that China has been selling at far cheaper prices than many U.S. businesses, threatening to put U.S. factories out of business.

The steps are likely to raise the cost of some imports at a time when Americans are already dissatisfied with rising prices. But they also represent a major effort by the Biden administration to address a salient political issue for some voters: America’s dependence on China for an array of products.

Both Democrats and Republicans have turned away from emphasizing the benefits of freer trade to criticizing the role that Chinese imports have played in hollowing out U.S. manufacturing and damaging the communities centered around those factories. This week, Vice President Kamala Harris sparred with former President Donald Trump over the impact of tariffs, and Republican lawmakers proposed several new laws aimed at reducing China’s economic influence.

One of the measures the Biden administration proposed would drastically limit a trade rule, called de minimis, that allowed more than 1 billion packages from China to enter the United States last year without being subject to existing tariffs. The administration said a flood of shipments under the rule had hurt U.S. manufacturers and allowed products like fentanyl and counterfeit goods to come into the country.

The trade rule allows packages to be shipped from foreign countries directly to consumers or businesses without paying tariffs, as long as the shipments do not exceed $800 per recipient per day. The new proposal would strip that exemption from a wide array of products and is likely to have a significant impact on large exporters of Chinese goods such as Shein and Temu, two online marketplaces that have become popular with American shoppers.

“The drastic increase in de minimis shipments has made it increasingly difficult to target and block illegal or unsafe shipments coming into the U.S.,” said Daleep Singh, the deputy White House national security adviser for international economics.

“We’re making sure foreign companies respect our laws and don’t endanger American families,” Singh added.

The Biden administration Friday also published a long-awaited review of the tariffs that the Trump administration placed on more than $300 billion worth of Chinese goods beginning in 2018.

The report, which runs to 187 pages, concluded that the Trump tariffs had been effective in reducing U.S. exposure to harmful trade practices from China and that they should be maintained. It found that those tariffs had encouraged China to take steps toward eliminating some of its harmful policies, though the report said such programs continue to exist.

The report also said that the tariffs contributed to U.S. companies shifting their sourcing out of and away from China. China’s overall share of U.S. imports fell to 13.7% in 2023 from 21.6% in 2017.

As part of the review, the Biden administration said it was adding or increasing tariffs on additional products from China, including electric vehicles, battery parts, medical gloves, graphite, semiconductors and other goods. Those levies will go into effect Sept. 27. The Biden administration put forward some of these additional tariffs in May, but this week’s report finalized those measures as well as proposed additional levies on tungsten and solar products.

Katherine Tai, the U.S. trade representative, said in a statement that the tariffs would “target the harmful policies and practices of the People’s Republic of China that continue to impact American workers and businesses.”

Liu Pengyu, the spokesperson for the Chinese Embassy in Washington, said in a statement that the tariffs were “the product of unilateralism and protectionism.”

“China firmly opposes this and will take all necessary measures to safeguard its own rights and interests,” he said.

The Information Technology Industry Council, a trade association for technology firms, said the additional tariffs on chips and other electronics would “cause more disruption and instability in global supply chains.”

The Biden administration “has repeatedly dismissed industry concerns regarding economic impacts and supply chain resilience in favor of more tariffs,” it said.

The decision to formalize Trump’s tariffs and add new ones could put Harris in a tricky position, given her criticism of the former president’s approach to China. Trump has said that, if elected, he would seek to impose even higher tariffs on China — as much as 60% — as well as a 10% to 20% tariff on imports from other countries. Harris has blasted that idea as a “national sales tax.”

At this week’s debate, Trump noted that the Biden administration had adopted similar trade policies, saying, “She’s going to my philosophy now. In fact, I was going to send her a MAGA hat.”

Democrats have tried to strike a careful balance in distinguishing their trade policy from that of Republicans while also trying to appeal to voters who appreciate Trump’s more aggressive trade approach.

The Biden administration’s review of Trump’s China tariffs, which took more than two years, spurred a debate among Biden officials. Some argued for reducing certain tariffs on goods as a way to ease prices on American consumers. But they were overruled by others who said the United States could not countenance decreasing trade penalties on China.

The Biden administration’s additional tariffs on electric vehicles and other products will cover $18 billion of Chinese imports. It is not clear exactly how much trade will be covered by the proposal to close the de minimis loophole, but the change appears to apply to a substantial portion of U.S. de minimis imports, which totaled $54.5 billion last year.

That measure, to be finalized after a public comment period, would eliminate de minimis treatment for any product subject to tariffs under several legal provisions, including those that the Trump and Biden administrations have used to levy tariffs on global metals, foreign solar panels and a vast array of products from China. Those tariff programs cover at least 40% of overall U.S. imports as well as 70% of Chinese textile and apparel imports, the administration said.

The de minimis provision stems from a century-old trade law and was originally intended for shipments that would be too trivial to require scrutiny from U.S. customs officials.

But in recent years, online companies like Shein — and some sellers of Chinese goods on Amazon — have used the provision to gain market share in the United States, shipping cheap clothing and other items directly from Chinese factories to consumers’ doorsteps. In addition to bypassing tariffs, the companies can eliminate costs for warehousing in the United States.

The number of packages entering the United States each year under the de minimis rule reached more than 1 billion in 2023, compared with 140 million a decade ago, according to federal statistics. Importers do not have to provide as much information to U.S. Customs and Border Protection as with other packages, creating concerns that it has become a conduit for drugs and unsafe products.

China is by far the biggest source for such packages, sending more than all other countries combined, according to the customs agency.

House Republicans had discussed taking up legislation to limit de minimis shipments in a package of bills targeting China this week, but they ultimately could not agree on a measure. In recent years, lawmakers of both parties in the House and the Senate have proposed legislation to clamp down on de minimis shipments.

In a letter to the Biden administration Wednesday, more than 100 Democratic lawmakers urged it to use “the full range” of its authorities to limit de minimis shipments.

On Friday, Rep. Jason Smith, R-Mo. and chair of the Ways and Means Committee, claimed credit for the policy. He said that the Biden rule mirrored a law proposed by a Republican representative and passed by the committee this year.

“They say imitation is the highest form of flattery,” he said, “so I am pleased Democrats in Washington are once again acknowledging that Republicans’ tough-on-China trade policy works.”

The Retail Industry Leaders Association, a trade group that includes Home Depot, Target, Dollar General and others, praised the move, saying it would protect “American consumers and disadvantaged American companies” as well as help authorities keep noncompliant or dangerous goods from entering the United States.

Both Shein and Temu have said that while they use de minimis, it is not core to their success. A Temu spokesperson said the company was open to changes that helped consumers.

Donald Tang, executive chair of Shein, said in an interview Thursday that he would be “very happy to embrace” the end of de minimis. As long as it is there, “then we’re going to use the channel,” he said. But if it is eliminated, “then we’re going to find different ways to satisfy our customers.”

Both Democratic lawmakers and the Biden administration have suggested that Congress will need to take further action to shut down the de minimis exemption more fully.

Groups including the U.S. Chamber of Commerce and shippers like FedEx and UPS have opposed the changes to de minimis proposed by lawmakers. The National Foreign Trade Council, which lobbies on behalf of major importers, has argued that getting rid of de minimis would create more work for Customs and Border Protection and not do much to stop illegal substances from entering the United States.

“The only outcome here is that it’s a tax increase,” said John Pickel, the organization’s senior director of international supply chain policy.

An economic study released in June found that eliminating de minimis entirely would result in costs of $12 billion to $14 billion for American consumers. (The Biden administration’s move will only narrow the exemption, not eliminate it.)

An author of that study, Amit Khandelwal, an economist at Yale University, said the costs of repealing de minimis would fall disproportionately on lower-income people, who his research showed were purchasing more from China than wealthier groups.

“Domestic retailers, domestic producers, they obviously would benefit from taxing these imports,” he said. “But there is a cost, and the cost is often harder to see.”

This article originally appeared in The New York Times.

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