New app helps businesses navigate Biden's tariffs on China
A new application developed by Kyle Handley, associate professor of economics at the University of California San Diego School of Global Policy and Strategy (GPS), allows users to see what products will be impacted the most from the recent tariffs the Biden administration will introduce on items imported from China. It also shows whether the same good could be imported from another source country at a cheaper price.
The tariffs introduced last week were placed on a variety of goods, including electric vehicles, semiconductors, solar cells and batteries.
The Biden Tariff Analyzer App can act as a tool for businesses and governments to identify quickly what the problem imports will be and whether alternative source countries are available, providing the top 10 suppliers of each product by trade value and trade share for 2023.
"The new tariffs are likely politically motivated by the administration, so that it can appear to be 'tough on China,'" Handley, who also is the director of UC San Diego Center for Commerce and Diplomacy, said. "For example, the administration placed a 100% tariff on electric vehicles (EVs), yet the U.S. imports only 2% of EVs from China."
The app reveals that other tariffs may prove challenging for the U.S. such as the new 25% tariff on permanent magnets, which are used in batteries and other consumer goods. There is no other major source country for this product outside of China—about 80% of these magnets come from China, with 5% from Japan and 3% from Germany.
However, the tariffs on permanent magnets and other materials like graphite (which is 70% sourced from China), will not go into effect until 2026.
"This could be because the administration doesn't know themselves where we could get enough graphite or permanent magnets needed to produce enough batteries to meet demand," Handley said. "The reality is these tariffs may be pushed out even further in time because Biden is urging our allies to also be tough on China when it comes to trade. If everyone shifts toward Japan, for example, for imports of permanent magnets and Japan can't ramp up quickly from its 3% market share, then we will have a yet another supply chain problem."
While the tariffs are not expected to have any immediate impacts, the burden of the cost increases could be passed onto consumers when the new trade rules are implemented.
"There's is no way around the logic the tariffs will have to push up prices if they are to succeed in either helping American companies compete or inducing a shift in sourcing to other countries and domestic suppliers," Handley said. "We know that most of the cost from the Trump administration tariffs were passed on to consumers, either directly or through the rising costs of materials to manufacturers for things like semiconductors, lithium-ion batteries and steel."
Handley built the app using data sourced from the Office of the U.S. Trade Representative (USTR) and U.S. Census Bureau. The Biden Tariff Analyzer App can be found at this link.
Provided by University of California - San Diego