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Earth Intelligence

16 May 2024 — 5 min read

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U.S. China Tariffs
U.S. Inflation

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U.S. China Tariffs:

President Biden has escalated tariffs on a range of Chinese imports, marking a significant tightening of trade policies. The U.S. will now impose a 100% tariff on Chinese electric vehicles (EVs), a dramatic increase from the existing 25%. This measure is largely symbolic given the ongoing exclusion of Chinese EVs from the U.S. market due to restrictions put in place during the Trump administration. Additionally, the administration is raising tariffs on several other Chinese products.
Tariffs on lithium batteries will jump from 0% to 25%, while tariffs on solar cells and semiconductors will double from 25% to 50%. Tariffs on steel and aluminum will also see a substantial increase, moving from a range of 0-7.5% up to 25%. This move comes amidst a backdrop of tariff history where such trade measures have often been used as tools for both protecting domestic industries and exerting political pressure. The imposition of tariffs can be traced back to the 1930s with the Smoot-Hawley Tariff Act, which significantly raised U.S. tariffs on over 20,000 imported goods.
This approach has been seen repeatedly as governments use tariffs to respond to various economic and political challenges. This increase in tariffs by the U.S. reflects ongoing concerns over technology competition and trade imbalances with China, particularly in sectors critical to future economic dominance like semiconductors and renewable energy technologies.
By imposing these tariffs, the U.S. aims not only to protect its industries but also to pressure China into addressing issues related to intellectual property rights and trade practices that have long been points of contention. These developments are likely to further exacerbate trade tensions, potentially affecting global markets and international relations in technology and manufacturing sectors.

U.S. Inflation

Inflation in the United States showed a modest decline last month, influenced by decreases in food and auto prices. According to the Labor Department, consumer prices increased by 0.3% from March to April, a slight reduction from the 0.4% rise seen the previous month. On an annual basis, the inflation rate dipped from 3.5% to 3.4%. Furthermore, core inflation, which strips out the more volatile food and energy sectors, reached its lowest point in three years.
The recent data marks a shift after the first quarter of the year experienced higher than anticipated inflation rates, reversing a trend of decreasing inflation during the latter half of 2023. This cooling in price increases, particularly in service sectors like hotels, healthcare, and auto repairs, is noteworthy as these areas had previously contributed to sustained high inflation levels.
This easing of inflation could impact the Federal Reserve's monetary policy decisions, suggesting that if the trend continues, there might be less pressure to implement aggressive rate hikes, which are used to combat high inflation. The movement towards the Fed's target inflation rate of 2% also supports a potentially more stable economic environment, reducing the likelihood of abrupt financial policy shifts.

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