The Biden administration is expected to make a major announcement on China tariffs as soon as next week that will impact semiconductors, solar power, and electric vehicles, according to Bloomberg, citing people familiar with the matter. While the possibility of additional tariffs has been widely known, the specific industries to be targeted have now been identified. Moreover, Beijing will likely release angry comments after Biden's speech next week, followed by a tit-for-tat response.
Two of the people said the decision to hit China's "new three" green goods comes after a review of Section 301 tariffs, which were first implemented under former President Trump in 2018. The tariffs primarily target electric vehicles, batteries, and solar cells, with existing tariffs being maintained. They said the announcement is planned for Tuesday.
Last month, the president said he would impose 25% tariffs on Chinese steel and aluminum. Earlier this week, the administration said it would revoke Intel and Qualcomm's export license to supply semiconductors to Chinese firm Huawei.
If China were to retaliate, in a tit-for-tat effort, they could hit Elon Musk's Tesla or continue reducing US agricultural exports of corn and soybean.
"Instead of correcting its wrong practices, the United States continued to politicize economic and trade issues," Chinese Foreign Ministry spokesperson Lin Jian said Friday, adding, "To further increase tariffs is to add insult to injury."
Meanwhile, if reelected, Trump has promised to hit China with a tsunami of tariffs, vowing a 60% tax on all Chinese imports.
US Senator Chuck Grassley, an Iowa Republican, warned Beijing will respond:
"We know how China reacted when Trump put tariffs on ... and they hit agriculture with it. I can't be sure that China would hit agriculture the same as they did in the Trump ones, but they're going to hit back."
In markets, Chinese shares of solar firms fell on the news:
The yuan weakened in both onshore and offshore markets, while CSI 300 Index fell:
"It'll definitely cause investors to pause on stocks that are potentially exposed," said Xin-Yao Ng, director of investment at abrdn. He added, "Everyone knows it's a risk."
Here's what other Wall Street analysts are saying (list courtesy of Bloomberg):
AllianceBernstein (John Lin)
ANZ Banking Group (Khoon Goh)
Maybank (Fiona Lim)
TD Securities (Alex Loo)
Eastspring Investments (Ken Wong)
Saxo Capital Markets (Charu Chanana)
IG Markets (Hebe Chen)
Shanghai Jade Stone Investment Management (Chen Shi)
Deepening a trade war with China comes as Biden's polling data is absolutely awful.
This shows Biden's polling data versus headlines in corporate media featuring trade war-related news.
A tough-on-China stance could be a new strategy the administration attempts to win back voters.
... it won't work.
By Zerohedge.com
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