Narayan AmmachchiThe United States introduced new tariffs on Chinese imports, including electric vehicles, solar panels, semiconductors and batteries.
The new tariffs seemingly aim to further erode the US’ dependence on China for its supply of goods, leading to a relocation of industrial production closer to home.
Washington has imposed tariffs on Chinese imports since 2018. Tariffs currently range from 10% to 25%, with the average reaching 19%.
This latest tariff increase coincides with Washington’s support for the Inter-American Development Bank’s (IDB) US$3.5 billion investment pledge over the next few years, aimed at boosting “nearshoring” within Latin America and the Caribbean.
The Trump administration imposed broad tariffs on Chinese goods to encourage consumers to choose domestic alternatives. In contrast, the Biden administration is taking a more targeted approach, focusing on specific high-tech sectors, like electric vehicles and semiconductors.
President Biden also emphasized that these tariffs could apply even if Chinese manufacturers move production to Mexico to bypass duties.
With its established role as a manufacturing hub for auto parts, agricultural products and bulky goods, Mexico is well-positioned to benefit from nearshoring . The value of trade from Mexico to the US has surged in recent years, reaching US$454.8 billion in 2022, a significant increase from 2012.
Some analysts suggest that Biden’s decision may also influence domestic demand for semiconductors and clean energy technology. Additionally, China’s dominance in producing rare earth metals, which are crucial for semiconductors, is a significant factor.
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