Shipper Alert! Biden Hikes Tariffs on $18 Billion Worth of Imports from China

The Biden Administration took a page out of the Trump Administration handbook this week as it announced big tariff hikes on imports from China. Regular readers of Universal Cargo’s blog won’t be surprised by this. President Biden threatened such tariff hikes a month ago, and I predicted here that he likely would follow through on the threat.

Rebecca Picciotto reported the details in a CNBC article:

Starting this year, President Joe Biden will quadruple tariffs on imported Chinese electric vehicles, from 25% to 100%. The import tax on Chinese solar cells will double, from 25% to 50%. And tariffs on some Chinese steel and aluminum imports will increase more than three-fold, from 7.5% today up to 25%.

The president also directed U.S. Trade Representative Katherine Tai to more than triple the tariff rates on lithium-ion batteries for EVs and lithium batteries meant for other uses. Starting in 2025, tariffs on imported Chinese semiconductors will jump from 25% to 50%.

First-time tariffs will be imposed on Chinese imports of medical needles and syringes, as well as massive ship-to-shore cranes, the White House said in a fact sheet. Chinese rubber medical gloves and some respirators and face masks will also be hit with higher tariff rates.

Picciotti’s article is worth reading, as she gets into the political stakes for President Biden versus President Trump in the upcoming election, concerns about China overproducing clean energy products like solar panels and electric cars and then dumping them in the U.S. and other markets, and President Biden’s insistence that the tariff hikes won’t cause even more inflation despite what economic analysts say.

Of course, our focus here is on shipping.

President Trump’s trade war with China had a serious impact on U.S. shippers who import from China. Interestingly, hiked tariffs on China was seemingly the only Trump Administration policy that the Biden Administration did not try to reverse immediately upon entering office. Now, the Biden Administration adds even more hikes.

Solutions for Shippers Who Can’t Afford the Tariff Hikes

There will be businesses that will need to strategize how to handle these tariff hikes on Chinese goods.

In 2018, we gave two solutions to the problem when the Trump Administration was raising tariffs on imports from China.

Exemptions?

The first was an exclusion request. However, back then there was a Section 301 tariff exclusion process that some shippers were able to utilize to protect them from the increased cost of importing from China. There will undoubtedly be some exemptions on the hikes the Biden Administration is making.

In fact, Bloomberg has already published an article on exemptions for key solar manufacturing equipment.

Exemption announcements and processes for applying to these will be worth watching, but…

Alternate Sourcing

For most, there won’t likely be exemptions on Chinese goods they currently import that fall within the range of those getting increased tariffs. That brings us to the second solution option.

That option is to change sourcing. Importing from other countries or manufacturing domestically may be much better options than continuing to import from China. When President Trump raised tariffs on China, many shippers went with such a choice. U.S. manufacturing saw increases, though there were other Trump Administration policies that played into this too.

Domestic sourcing is absolutely an option worth looking into. And Universal Cargo can even help arrange domestic trucking, as well as all of businesses’ international shipping needs.

When seeking alternate sourcing from other countries to import from, many shippers who import from China focus their search to other Asian countries to replace China. There may be great options with importing from Japan, Malaysia, South Korea, Taiwan, and others, but shippers shouldn’t overlook options around the globe, including Europe, South and Central America, and even our direct neighbors, Canada and Mexico.

There may be good options in places that surprise shippers. And, of course, Universal Cargo is happy to serve your business, handling your importing and exporting around the world.