Exclusive: US locks in steep China tariff hikes, many to start Sept. 27

By David Lawder September 13, 2024

Sept 13 (Reuters) - The Biden administration on Friday locked in steep tariff hikes on Chinese imports, including a 100% duty on electric vehicles, to strengthen protections for strategic domestic industries from China's state-driven excess production capacity.

The U.S. Trade Representative's office told Reuters that many of the tariffs, including a 100% duty on Chinese EVs, 50% on solar cells and 25% on steel, aluminum, EV batteries and key minerals, would go into effect on Sept. 27.

The USTR determination, first reviewed by Reuters, showed a 50% duty on Chinese semiconductors, which now include two new categories - polysilicon used in solar panels and silicon wafers - are due to start in 2025.

Adjustments to the punitive "Section 301" tariffs on $18 billion worth of goods announced in May by President Joe Biden were minimal and disregarded auto industry pleas for lower tariffs on graphite and critical minerals needed for EV battery production because they are still too dependent on Chinese supplies.

USTR left unchanged the tariff increase to 25% from zero on lithium-ion batteries, minerals and components, with the increase for batteries for EVs taking effect Sept. 27 and those for all other devices, including laptops and cell phones, on Jan. 1, 2026.

'TOUGH, TARGETED'

Lael Brainard, the top White House economic adviser, told Reuters that the decision was made to ensure that the U.S. EV industry diversifies away from China's dominant supply chain.

She said such "tough, targeted" tariffs are needed to counteract China's state-driven subsidies and technology transfer policies that have led to over-investment and excess production capacity. But Washington is investing hundreds of billions of dollars worth of its own tax subsidies to develop domestic EV, solar and semiconductor sectors.

"The 100% tariff on electric vehicles here does reflect the very significant unfair cost advantage that Chinese electric vehicles in particular are using to dominate car markets at a breathtaking pace in other parts of the world," Brainard said. "That's not going to take place here under the vice president's and the president's leadership."

China has vowed retaliation against the "bullying" tariff hikes and argued that its EV industry's success is due to innovation, not government support.

The higher U.S. tariffs take effect as Vice President Kamala Harris and former President Donald Trump are both courting voters in auto and steel producing states, trying to position themselves as tough on China ahead of the November presidential election. Trump has vowed to impose 60% tariffs on all Chinese imports.

The European Union and Canada also have announced new import tariffs on Chinese EVs, the latter matching the 100% U.S. duties.

PORT, MEDICAL RELIEF

The final tariff decision does provide some temporary relief for U.S. port operators who were facing a new 25% tariff on massive ship-to-shore cranes, an industry that China dominates with no U.S. producers.

The duty would add millions of dollars to the cost of each crane. USTR said it will allow exclusions from the tariffs for any Chinese port cranes that were ordered prior to the May 14 initial tariff announcements, as long as they are delivered by May 14, 2026.

USTR raised tariffs to 50% on medical face masks and surgical gloves, from an initially proposed 25%, but delayed their start to allow a shift to non-Chinese suppliers. The planned duty on Chinese syringes, which were in short supply during the COVID-19 pandemic, will immediately rise to 100% from a previously planned 50%, but USTR will allow a temporary exclusion for enteral syringes, used to feed infants, for a year.

The agency also said it will consider requests for tariff exclusions for five Chinese industrial machinery categories, including those for machinery for purifying or filtering liquids, industrial robots and printing machinery.

It will allow tariff exclusions for Chinese solar wafer and cell manufacturing equipment, but not for equipment used to make full solar modules⍐.

 

Boeing's US factory workers strike, halting 737 MAX production

SEATTLE, Sept 13 (Reuters) - Boeing's U.S. West Coast factory workers walked off the job early on Friday after overwhelmingly rejecting a contract deal, halting production of the planemaker's strongest-selling jet as it wrestles with severe output delays and heavy debt.

The workers' first strike since 2008 comes as the plane maker is under heavy scrutiny from U.S. regulators and customers after a door panel blew off a 737 MAX jet mid-air in January.

 A door panel blew off a 737 MAX jet mid-air in January

The mounting crises battered Boeing's stock and sparked a leadership upheaval. Boeing shares fell 4% in U.S. pre-market trading on Friday. The stock has fallen nearly 38% since the start of 2024.

New CEO Kelly Ortberg CEO Kelly Ortberg was brought in just weeks ago to restore faith in the planemaker and had proposed a deal including a pay rise of 25% over four years, far lower than the 40% workers had demanded.

Roughly 30,000 International Association of Machinists and Aerospace Workers (IAM) members who produce Boeing's 737 MAX and other jets in the Seattle and Portland areas voted on their first full contract in 16 years, with 94.6% rejecting it and 96% favoring a strike in a two-part ballot.

"This is about respect, this is about addressing the past, and this is about fighting for our future," said Jon Holden, who headed the negotiations for Boeing's largest union, before announcing the vote result on Thursday evening.

"We strike at midnight," said the union leader who had agreed to the just-defeated deal, as members in the union hall cheered and chanted: "Strike! Strike! Strike!"

BOEING, UNION KEEN TO GET BACK TO THE TABLE

A long strike could badly hit Boeing's finances, which are already groaning due to a $60 billion debt pile.

"We remain committed to resetting our relationship with our employees and the union, and we are ready to get back to the table to reach a new agreement," the planemaker said in a statement on Thursday.

The proposed deal included a $3,000 signing bonus and a pledge to build Boeing's next commercial jet in the Seattle area, provided the program was launched within the four years of the contract.

"The key question now is on the duration of the strike given the gap between the proposed wage increase and union members request," Jefferies analyst Chloe Lemarie said in a note, adding that a long strike represents a key risk for 737 MAX production levels.

Although IAM leadership recommended last Sunday that its members accept the contract, many workers had responded angrily, arguing for the original demand and lamenting the loss of an annual bonus⍐.

 

A pedestrian walks near the British embassy in Moscow, Russia
September 13, 2024. REUTERS/Evgenia Novozhenina

Russia expels six UK diplomats as tensions rise over Ukraine missiles

Sept 13 (Reuters) - Russia's FSB security service said on Friday it had revoked the accreditation of six British diplomats in Moscow after accusing them of spying and sabotage work, signalling the Kremlin's anger at what it sees as London's vital role in helping Ukraine.

Britain's embassy in Moscow and the UK government did not immediately respond to Reuters requests for comment.

Russia announced the expulsions hours ahead of planned talks in Washington between British Prime Minister Keir Starmer and U.S. President Joe Biden on the next steps in supporting Ukraine, centring on whether to allow Western missiles to be used to hit targets in Russia.

President Vladimir Putin said on Thursday that the West would be directly fighting with Russia if it allowed Ukraine to strike Russian territory with Western-made long-range missiles, a move he said would alter the nature and scope of the conflict.

The FSB, the main successor agency to the Soviet KGB, said it had documents showing that a British foreign office department in London responsible for Eastern Europe and Central Asia was coordinating what it called "the escalation of the political and military situation" and was tasked with ensuring Russia's strategic defeat in its war against Ukraine.

"The facts revealed give grounds to consider the activities of British diplomats sent to Moscow by the directorate as threatening the security of the Russian Federation," the FSB said in a statement.

"On the basis of documents provided by the Federal Security Service of Russia and as a response to the numerous unfriendly steps taken by London, the Ministry of Foreign Affairs of Russia, in co-operation with the agencies concerned, has terminated the accreditation of six members of the political department of the British Embassy in Moscow in whose actions signs of spying and sabotage were found," it said.

The six diplomats were named on Russian state TV, which also showed photographs of them. Surveillance footage of them was also released to Russian media, including covert video surveillance of a British diplomat meeting someone.

"The English did not take our hints about the need to stop this practice (of carrying out intelligence activities inside Russia), so we decided to expel these six to begin with," an FSB employee whose identity was hidden told the Rossiya-24 state TV channel.

The FSB said Russia would ask other British diplomats to go home early if they were found to be engaged in similar activity.

The Izvestia newspaper cited the FSB as saying that the British diplomats had recruited Russian teenagers, organised what it called provocations, and held talks in the British ambassador's Moscow residency with opposition figures.

It accused British diplomats of working with Russian activists to try to create divisions within Russian society around different ethnic groups and migrants and said many of the people involved in coordinating Britain's work on Ukraine based in London and Kyiv were working for the MI6 foreign intelligence service.

Russian Foreign Ministry spokeswoman Maria Zakharova said the activities of the British embassy in Moscow had gone well beyond the Vienna diplomatic conventions.

"More importantly, it is not just a question of formality and non-compliance with declared activities, but of subversive actions aimed at damaging our people," Zakharova said on Telegram⍐