Will Joe Biden’s new China tariffs “hit every family”?

President Joe Biden recently said the United States would sharply increase tariffs on some Chinese goods, including electric vehicles, semiconductors and solar panels.

The White House said the move — which echoes some of the trade-war agenda of Biden’s predecessor, former President Donald Trump — aims to protect American industries’ competitiveness in the growing clean energy sector and curb unfair trade practices by China.

In a May 14 X post, Biden said he had "imposed a series of tariffs on goods made in China: 25% on steel and aluminum, 50% on semiconductors, 100% on EVs (electric vehicles), and 50% on solar panels. China is determined to dominate these industries. I'm determined to ensure America leads the world in them." And in remarks at the White House that day, he called the tariffs "strategic and targeted."

But not everyone approved. 

Democratic Gov. Jared Polis of Colorado, labeled the decision "horrible news for American consumers" and a "major setback for clean energy."

"Tariffs are a direct, regressive tax on Americans, and this tax increase will hit every family," Polis wrote as he reshared Biden’s post.

Is Polis right? 

Experts say the tariffs could amount to a tax increase on many Americans. But they add that the notion that "every" American family will be hit is likely exaggerated.

"When it comes to these specific tariffs, the short-term effects may be limited," said Howard Gleckman, a senior fellow at the Urban Institute, a Washington, D.C., think tank. "Very few Chinese-made electric vehicles are sold in the U.S. today, so there will be little direct effect. And Chinese aluminum and steel accounts for only a small fraction of US imports of those goods. … So the price effects will be small."

Polis’ office did not provide information for this fact-check.

A tariff is a government tax imposed on goods and services imported from other countries. Countries often impose tariffs in the name of making their domestic companies more competitive with foreign counterparts; the tariffs either make the foreign items more expensive, putting them at a disadvantage in the marketplace, or they make foreign companies forgo entering the market at all.

Biden’s new round of tariffs apply to about $18 billion of annual imports from China, the White House said. Other Chinese goods that will face higher tariffs include batteries, battery components, certain minerals, cranes used at ports, certain medical products, steel and aluminum.

Under the new standard, the tariff rate for Chinese-produced electric vehicles will rise from 25% to 100% this year, while semiconductor tariffs will double from 25% to 50% by 2025. Tariffs on lithium-ion batteries, a key component of EVs, will increase from 7.5% to 25%. Tariffs on solar panels will rise from 25% to 50%. Tariffs on steel and aluminum will increase from 0% to 25%.

In pursuing the new tariffs, Biden has regularly accused China of flooding the global market with goods at what the White House calls "artificially low" prices. The White House says the Chinese government heavily subsidizes the nation’s companies, which allows Chinese competitors to overproduce because they don’t have to worry about turning a profit.

"When you make tactics like these, it's not competition, it's cheating, and we've seen the damage here in America," Biden said while announcing the tariffs at the White House Rose Garden.

Trump, Biden’s expected 2024 presidential opponent, also pursued an aggressive tariff policy during his presidency to reduce U.S. reliance on Chinese imports and narrow the trade deficit. Trump’s tariffs on Chinese goods totaled about $300 billion. Biden criticized those tariffs during his 2020 presidential run, arguing that they had little impact on consumers compared to the costs to Americans.

Polis’ first point is that tariffs amount to a tax on consumers. There’s significant evidence to support that.

Multiple studies, reports and economists have concluded that if tariffs are high enough, foreign companies will typically pass much of the added cost to consumers in the tariff-levying country. 

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Joe Biden

stated on May 12, 2024 in a fundraising event in Seattle

"China's in a situation where they have more retired than working."

After Trump imposed his tariffs, importers passed along most or all of the costs to consumers or to producers who use Chinese materials in their products, studies show. A U.S. International Trade Commission review found the tariffs were paid primarily by U.S. importers while prices for Chinese exporters were "largely unaffected."

"In general, tariffs are passed on to consumers," Gleckman said. "Not only do the prices of the tariffed goods usually increase, but so do prices of competing domestic products. Without low-priced foreign competition, domestic manufacturers are free to raise their own prices."

Another problem with tariffs, Gleckman said, is that they encourage producers to move production to a nontariffed country. "So Biden may be protecting U.S. automakers from China, but what about, say, Brazil or Mexico?" he said.

And because studies have shown that lower-income Americans tend to spend a larger fraction of their income on goods, they could feel the pinch from tariffs more acutely than more affluent Americans would, as Polis said.

"The consensus has not changed: Tariffs are regressive, in that the people with lowest means will be paying the most when a tariff is placed on a good," said Ross E. Burkhart, a Boise State University political scientist who specializes in trade policy.

However, Polis’ second point, that "every family" will be affected by the Biden tariffs, is exaggerated, experts said.

For starters, Burkhart said, electric vehicles "are still a niche product" that not every family will look to buy soon. And even within this niche market, Chinese EVs have almost no U.S. market share. According to the Atlantic Council, a Washington, D.C.-based think tank, China shipped $368 million in EVs to the U.S. in 2023, a tiny fraction of the $7.4 billion shipped by European Union nations the same year.

Meanwhile, although steel, aluminum, and semiconductors are widely used throughout the economy, the new tariffs are levied narrowly at products from China, said Katheryn N. Russ, a University of California, Davis economist. 

"Most steel from China already is subject to high duties," Russ said. "The effect of a narrowly targeted tariff like this may be modest if producers can switch to suppliers in other countries, and domestic producers of these products still will be subject to price competition from other countries who are not facing a similar hike in the tariff."

In any case, such materials "tend to be small input prices of finished goods, and Chinese exports of both products to the U.S. are generally declining," said Scott Paul, the president of the Alliance for American Manufacturing, an advocacy group comprising U.S. manufacturers and the United Steelworkers. "In a $25 trillion economy these very targeted measures won’t even be felt in a meaningful way."

The White House is making much the same argument. In discussions with journalists during the run-up to announcing the new tariffs, Biden administration officials argued that their more targeted tariffs would be less likely to increase consumer prices — a crucial concern both economically and politically, given the high inflation during much of Biden’s term.

Polis called tariffs a "direct, regressive tax on Americans" and said Biden’s new tariffs on Chinese goods will "hit every family."

There is widespread academic support for the notion that tariffs raise prices for consumers, and that lower-income consumers tend to be hurt disproportionately.

However, experts said the targeted nature of Biden’s tariffs on China’s clean energy sector should limit their inflationary effect, making it unlikely that "every family" would be affected in a significant way.

We rate the statement Half True.