President Biden Announces New Tariffs
President Joe Biden has unveiled a new round of tariffs on Chinese goods, escalating trade tensions and aiming to bolster domestic industries. Biden announced the tariffs via Twitter, targeting key sectors such as steel, aluminum, semiconductors, electric vehicles (EVs), and solar panels.
The tweet: “I just imposed a series of tariffs on goods made in China: 25% on steel and aluminum, 50% on semiconductors, 100% on EVs, and 50% on solar panels.” (X)
Why it matters: This move signifies a continuation and intensification of the trade policies initiated by former President Donald Trump. Biden’s endorsement of maintaining tariffs on more than $300 billion worth of Chinese goods suggests a sustained commitment to tariffs as a tool to protect U.S. industries from foreign competition.
By the numbers:
- Steel and aluminum: 25% tariff
- Semiconductors: 50% tariff
- Electric vehicles: 100% tariff
- Solar panels: 50% tariff
What they’re saying:
- Lael Brainard, Biden’s National Economic Advisor: When asked by reporters what these tariffs would cost the American Consumer Brainard replied “No increases on costs. I think what Americans can expect is that the investment boom that is undergoing that is fueling record levels of jobs in manufacturing and factory construction will continue. I think there is a comeback that we’re seeing across communities that had long cycles of disinvestment. These tariffs will protect and safeguard those gains.”
The impact:
- Impact: A study by the Tax Foundation found that the tariffs imposed by the Trump administration, which are being upheld by Biden, are expected to reduce long-run GDP by 0.21%, decrease wages by 0.14%, and result in a loss of 166,000 full-time equivalent jobs.
Mortgage Rate Impact: It’s hard to know. If the tariffs increase consumer prices that will keep inflation high and could prevent the Fed from lowering rates. However, if the tariffs lower economic growth and weaken the labor market this could give the Fed the data to lower rates. Obviously, the worst case scenario is if prices rise weakening economic growth and the labor market.
