Biden Administration Escalates Trade War with New China Tariffs

The US government has dropped a tariff bomb on China, increasing tariffs steeply on Chinese electric vehicles and batteries. In response, our government is assessing the impact by closely monitoring the situation.

On the 16th, the Ministry of Trade, Industry, and Energy held a joint public-private meeting chaired by Deputy Minister Yang Byung Nae and discussed these issues with the automobile and battery industries.

Earlier, on the 14th, President Joe Biden directed the U.S. Trade Representative (USTR) to increase tariffs on $18 billion worth of Chinese imports. This is in response to China’s unfair trade practices and the resulting damages.

As a result, the tariff on electric vehicles is expected to increase from the current 25% to 100% within this year, and the tariff on lithium-ion batteries for electric vehicles will rise from 7.5% to 25%.

At the meeting, there was a focused discussion on how the measures of the U.S. will impact South Korean domestic companies in the U.S. and global markets.

The South Korean domestic automobile and battery industries are initially expected to benefit from the U.S. market, including possible reflective interest. However, there are concerns about damages due to excessive competition with Chinese products outside the U.S. market or due to links with the Chinese supply chain.

There is also industry speculation that the tariff bomb against China, a strategic competitor, is part of the Democratic Party’s election strategy, with the U.S. presidential election coming up in November.

Deputy Minister Yang said, “We plan to monitor China’s response to this measure continuously and the reactions of major markets such as the European Union (EU), support the diversification of domestic industries’ supply chains and minimize the negative impact on domestic industries while enhancing global market competitiveness.”

Meanwhile, the South Korean Ministry of Industry plans to hold additional meetings for industries such as semiconductors, which are under the target of the U.S.’s tariff increase on Chinese products.