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Biden to raise tariffs on Chinese goods from electric vehicles to semiconductors

MICHEL MARTIN, HOST:

China is slamming a Biden administration plan to hike tariffs on $18 billion worth of Chinese goods. The administration says the move is needed to counter what it calls Beijing's unfair trade practices. China's commerce ministry vowed this morning to take measures to protect its interests. Its foreign ministry called the move bullying. But the White House says it needs to target industries such as electric vehicles, semiconductors and steel to protect American businesses and workers.

U.S. Trade Representative Katherine Tai talked with me earlier today about the administration's plans.

KATHERINE TAI: This is very much a part of President Biden's overall commitment to America and Americans that he's going to build our economy from the middle out and from the bottom up, and that means standing up for the rights of America's workers and investing in America's manufacturing capacities. And that is very much what this particular tariff action is about.

MARTIN: You plan to quadruple, to 100%, tariffs on electric vehicles from China. The current 27% rate is high enough to keep them out, so I have two questions about this. What's the practical impact of going to 100%, and why do you think China's EV industry is such a threat?

TAI: Certainly. Well, the increase on tariffs will cover about $18 billion worth of trade with China. I know this is targeted at very specific, strategic sectors - industries of the future like electric vehicles. As you note, currently, the tariff rate on imported Chinese electric vehicles is about 25%, 27%. And you might think that they are enough to keep the Chinese imports out. However, that is the case today.

One of the biggest challenges that we face - and it's really, really prevalent in the example of electric vehicles - is the amount of state support subsidization and, frankly, industrial targeting that results in China's dominance in certain sectors. We've seen it in the past with steel and aluminum, solar panels, and now we're seeing it with electric vehicles. The electric vehicles that are being produced by China - and the world is about to see - are incredibly price-competitive to the point where producers in markets like ours, which are really very open, which have been market-based - that is, subject to the demands of supply-and-demand dynamics - are going to really be crushed by what has been produced by these anticompetitive practices in Beijing.

MARTIN: So is the - let me just understand. Is the logic here to give American industry time to catch up and create a more affordable electric vehicle, or is it to try to - is it largely symbolic to basically tell China to stop subsidizing this industry internally? What's the goal here?

TAI: So with these tariff increases that you see, it is a result of a review of the existing tariffs that have been in place since 2018. And the Biden administration's approach is to take a more strategic, effective - a smarter approach. First of all, the tariffs we're maintaining and the tariffs that we are increasing are for leverage to continue to press and motivate China to change its unfair trade practices. The specific ones at issue are intellectual property rights abuses, stolen intellectual property, forced technology transfer. But in the meantime, until China changes its practices, these tariffs are also meant to give our industries a break - a respite to be able to breathe.

I don't know if you've seen, but with Chinese electric vehicles, they are able to retail in China for about 12- to $15,000. And at that rate, producers in markets like ours and also in markets like the European Union are not going to be able to compete and are going to be crushed by what we see as anticompetitive practices.

MARTIN: I got it. So just let me help people catch up here who are not sure what we're talking about. The administration has been reviewing the tariffs imposed by the Trump administration. You're keeping some of these tariffs on hundreds of billions of dollars of other Chinese goods, which were originally set by Trump. What do you say to people who argue that inflation is coming down, but it's still high, and this raises prices on goods at a time when Americans could use the relief?

TAI: Well, I think we've seen studies debunk the link between these tariffs and inflation. More importantly, being able to invest in our industry means that we are investing in supply-chain resilience. We're investing in our manufacturing capacities, which will allow for us to defend against the kind of inflationary price spikes that we've had over the last couple years, where supply was restricted and we weren't able to respond.

MARTIN: OK. Let's - more to talk about. That is the U.S. Trade Representative, Katherine Tai. Ambassador, thank you so much for joining us.

TAI: Thank you, Michel. Transcript provided by NPR, Copyright NPR.

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