U.S. Tariff Hikes on China: What Industry Leaders Are Saying

As reported by Logistics Management earlier this month, the White House announced that after a four-year review of tariffs on U.S.-bound imports from China, the tariffs will remain in place, with increases for certain products.

These tariffs initially took effect in 2018 under the direction of the Trump administration. The impetus for the increase in tariffs under Section 301 of the Trade Act of 1974 on $18 billion worth of imports from China is due to various actions China has taken, according to the White House, including unfair trade practices concerning technology transfer, intellectual property, and innovation threatening American workers and flooding global markets with artificially low-priced exports.

Notable tariff hikes on U.S.-bound imports from China cited by the White House include:

Certain steel and aluminum products under Section 301 will increase from 0-7.5% to 25% in 2024;
Semiconductors increasing from 25% to 50% by 2025;
Electric vehicles under Section 301 increasing from 25% to 100% in 2024;
Lithium-ion EV batteries increase from 7.5% to 25% in 2023, with the tariff rate on lithium-ion non-EV batteries increasing from 7.5% to 25% in 2026, and the tariff rate on battery parts increasing from 7.5% to 25% in 2024 (the White House said that China controls more than 80% of certain segments of the EV battery supply chain “despite rapid and recent progress in U.S. onshoring”);
Solar cells tariff rates, whether or not assembled into modules, increasing from 25% to 50% in 2024;
Ship-to-shore cranes increasing from 0% to 25% in 2024; and
For medical products, tariffs on syringes and needles will increase from 0% to 50% in 2024, certain personal protective equipment, including certain respirators and face masks, will increase from 0-7.5% to 25% in 2024, and tariffs on rubber medical and surgical gloves increasing from 7.5% to 25% in 2026

As for what this development means for supply chains, there has been no shortage of opinions.

John Donigian, Senior Director of Supply Chain Strategy at Moody's, stated that the new tariffs are another hit to supply chains as they try to manage ongoing risks and build resiliency.

“Whenever tariffs are increased, regardless of the rationale for doing so, the impact goes beyond cost increases to companies and consumers,” he explained. “Discussions on redesigning supply chains surface through considerations for reshoring as one way to offset costs. Supplier relationships are strained as contract re-negotiations to offset tariff impacts become commonplace. Companies may also adjust their inventory positions through increased buffer stocks to account for delays or disruptions in the supply chain. All of this leads to additional risk and complexity in an already strained supply chain environment.”

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