Tariffs up for China

The Biden administration released a memorandum on actions by the US based on a four year review of China’s trade practices that relates to technology, intellectual property and innovation and this resulted on an increased tariff actions which will be imposed by the US Trade representatives, here’s where the new tariffs will be added on: Battery parts (non-lithium-ion batteries) up 25%, electric vehicles increase rate to 100%, lithium-ion electrical vehicle and non-electrical vehicle batteries up 25% this year and the latter up 25% on 2026, natural graphite and other critical minerals up 25%, the graphite will be up on 2026, permanent magnets up 25% on 2026, semiconductors up 50% in 2025, ship to shore cranes up 25% in 2024, solar cells up 50% and steel and aluminum products up 25%, face masks up 25%, medical gloves up 25% in 2026 and syringes and needles up 50%. The report also addressed the effective tariff imposition as positive steps to encourage China to revise its foreign investments, administrative licensing laws, however the report believes that China’s action in addressing these trade concerns had not been systematic and sustained, and there are many technology related acts, policies and practices that was not removed and remained a burden and restrictive to facilitate the normal structures and flow of US trade policies and commerce. The report also pointed out that China continues to aggressively attempt “to absorb foreign technology and intellectual property through cyber intrusions and cyber theft” and this again becomes a burden to US commerce. So what’s the local impact? For one thing, this review and actions on China’s trade policies and practices will directly impact the trade end users, tariffs increases the cost of imported goods, which often leads to higher prices for consumers. This can reduce the purchasing power of consumers and decrease their overall consumption. While local businesses might alter their supply chains to source goods from countries not subject to tariffs. And this is not a good news for small American business owners that has no capacity to compete with industry giants in terms of changing their supply chains, this will force the small business to shut its doors down affecting the labor supply on a general scale because of unemployment add ons that will emerge from small business shut downs. China meanwhile may impose retaliatory tariffs, leading to a trade war. This can escalate and result in decreased international trade, harming global economic growth because of reduction on trade volume of both countries, the US and China.