US announces details on higher China tariffs, some to start 1 Aug
European autos stocks hit on China tariff jitters
The US Trade Representative's office on Wednesday said some of the steep tariff increases on an array of Chinese imports including electric vehicle batteries, computer chips and medical products will take effect on 1 August.
President Joe Biden will keep tariffs put in place by his Republican predecessor Donald Trump while ratcheting up others, including a quadrupling of EV duties to over 100% and doubling the duties on semiconductor tariffs to 50%.
The Trade Representative's office said a 30-day public comment period will close 28 June. They are seeking comments on the effects of the proposed tariff hike on the US economy, including consumers.
The US Trade Representative said the proposed Chinese tariff hikes "includes products targeted by China for dominance, or are products in sectors where the United States has recently made significant investments."
The new measures affect $18 billion in imported Chinese goods including steel and aluminum, semiconductors, electric vehicles, critical minerals, solar cells and cranes, the White House said. The EV figure, while headline-grabbing, may have more political than practical impact in the US, which imports very few Chinese EVs.
For medical products, public comment is being sought on whether the tariffs on face masks, medical gloves, syringes, and needles need to be higher than proposed.
The United States imported $427 billion in goods from China in 2023 and exported $148 billion to the world's No 2 economy, according to the U.S. Census Bureau, a trade gap that has persisted for decades and become an ever more sensitive subject in Washington.
US Trade Representative Katherine Tai has said the revised tariffs were justified because China was stealing US intellectual property. But Tai has also recommended tariff exclusions for hundreds of industrial machinery import categories from China, including solar product manufacturing equipment.
Ahead of Biden's expected action, China denounced the plan and vowed "resolute measures" to protect its interests. China has said the tariff measures are counter-productive and inflict harm on the US and global economy.
USTR said it would provide details on how companies could apply for machinery exclusions from the tariffs in a separate notice. But it said that any exclusions granted would be backdated to start on Wednesday and end on 31 May,2025
European autos stocks hit on China tariff jitters
European autos stocks were the worst performing equity market sector on Wednesday, following a report that suggested there was potential for China to impose higher tariffs on cars.
A government-affiliated auto research body expert told China's Global Times newspaper that China should raise its import tariffs on large gasoline-powered cars to 25%, as the country faces sharply higher US auto import duties and possibly additional duties to enter the European Union.
An index of European carmakers was last down 1.8% - making it the worst-performing sector - having pulled back from a 2.4% drop earlier in the session. The broader STOXX 600 which was last down 0.3%.
Germany carmakers BMW and Mercedes-Benz were last down 2.2% and 1.5%, respectively. Italian-American automaker Stellantis was down 0.9% having fallen as much as 1.9% earlier in the session.
French car parts maker Valeo was last down 2.5%.
Stellantis CEO: electric vehicle tariffs are a trap
Stellantis expects a major battle with Chinese rivals in the European market for electric vehicles, warning of significant consequences for jobs and production as a result, the group's Chief Executive Carlos Tavares said on Wednesday.
The comments in an interview with Reuters are among the CEO's most strongly worded yet as tensions among Beijing, Brussels and Washington over EV trade grow. The EU is expected to decide next month on whether to follow the US in imposing additional tariffs on Chinese carmakers.
US officials said Wednesday they plan to hit Chinese made EVs and EV materials with duties up to 100% by 1 Aug.
Tavares said tariffs on Chinese vehicles imported to Europe and the United States are "a major trap for the countries that go on that path" and will not allow Western automakers to avoid restructuring to meet the challenge from lower cost Chinese manufacturers.
The European Commission will unveil an initial decision on potential tariffs on Chinese EV imports on 5 June. China has been threatening counter tariffs.
"When you fight against the competition to absorb 30% of cost competitiveness edge in favour of the Chinese, there are social consequences. But the governments, the governments of Europe, they don't want to face that reality right now," Tavares said.
Tavares said that tariffs would only fuel inflation in the regions where they are imposed, potentially impacting sales and production.
"We are not talking about a Darwinian period, we are in it," Tavares said at a Reuters Events Automotive Europe conference in Munich, adding the price battle with Asian rivals would be "very tough".
"This is not going to be easy for the dealers. It's not going to be easy for the suppliers. It's not going to be easy for the OEMs. As we know in Europe, everybody is talking about change as long as change is for somebody else."
Italy's nationalist government has been pressing Stellantis to commit to building 1 million vehicles a year in the country, up from 750,000 last year. Tavares did not respond specifically to a question about Italy's demand, but outlined the overcapacity looming over the European auto sector.