With six months to go until the presidential election, Joe Biden showed this week that he is willing to put America’s longstanding championship of free trade further on the line in order to prevent Donald Trump from returning to the White House. On Tuesday, his administration unleashed a series of protectionist measures, designed to court blue-collar workers and nurture America’s industrial base. This included a quadrupling of the tariff rate on Chinese electric vehicle imports, doubling the levy on solar cells and more than tripling the fee on Chinese lithium-ion EV batteries. At this stage, any political gains are unclear. But for America and the world, it will probably do more harm than good.
Biden’s $18bn of additional trade tariffs on Chinese goods builds on the $300bn slapped down under Trump. The new 100 per cent levy on EVs carries more bark than bite, since the US imports just 2 per cent from China. But the tariffs will raise costs for battery makers, which are already struggling with expenses. Other manufacturers will be pinched by higher input costs. In the long-run, the tariff ratchet insulates American industry from competition, stymying innovation and raising costs for consumers. That is before considering any retaliation from China, which dominates supply chains essential to America’s economy.
