May 15, 2024 - Energy & Environment

"Stay tuned:" U.S., China settle in for long haul on tariffs

Illustration of king chess piece with star at the head of the piece

Illustration: Eniola Odetunde/Axios

President Biden's new tariffs on Chinese tech are just one move in an intricate struggle over trade in low-carbon energy equipment and inputs.

Why it matters: More fights loom as the White House looks to protect domestic manufacturers and court votes.

Catch up quick: On Tuesday, the White House announced 100% tariffs on Chinese EVs to keep them out of the U.S.

  • Biden also raised penalties on a range of key imports that include solar cells, batteries, and critical minerals.

What we're watching: Policy toward Chinese goods that do (or may) arrive through other countries.

  • On solar cells, domestic manufacturers are petitioning U.S. officials to slap new tariffs on low-cost, Chinese-linked exports from Cambodia, Malaysia, Thailand, and Vietnam.
  • That's important because, as S&P Global Commodity Insights and others note, direct Chinese cell exports to the U.S. are very small.
  • But U.S. project developers are very worried about anti-dumping and countervailing duty petitions the manufacturing coalition filed last month. A preliminary hearing happens today.

On EVs, one big question is whether Chinese players like BYD might open plants in Mexico or other nations to access the U.S. market.

  • Biden officials hinted at countermeasures but offered little detail. U.S. Trade Representative Katherine Tai, fielding a question about Mexico yesterday, said this requires a "separate pathway" and to "stay tuned."
  • A USTR spokesperson said the U.S.-Mexico-Canada trade agreement has "several provisions for addressing unfair subsidies and non-market trading practices," and the U.S. has "a variety of trade tools" at its disposal.

Friction point: Biden would need new legislation to truly thwart EVs from Mexico or elsewhere, Capital Alpha Partners' James Lucier argued in a note.

The bottom line: ClearView Energy Partners stressed the "political underpinnings" of Tuesday's moves.

  • "It is the second quarter of an election year, and President Joe Biden appears to be pursuing key swing-state industrial constituencies," the firm writes.
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