Background Press Call by National Economic Advisor Lael Brainard and Senior Administration Officials on President Biden’s Actions to Protect American Workers and Businesses from China’s Unfair Trade Practices
3:23 P.M. EDT
MR. KIKUKAWA: Hey, everyone. Thank you for joining our call today. Apologies that the daily press briefing is still ongoing.
Today’s call is embargoed until tomorrow at five o’clock a.m. Eastern time. It will — we will start with on-the-record remarks from National Economic Advisor Lael Brainard, followed by a background Q&A from “senior administration officials.”
The — if you did not already receive the factsheet, please email me. The factsheet is also embargoed until 5:00 a.m. tomorrow.
With that, I will turn it over to Lael.
MS. BRAINARD: Well, thank you, and thanks to everyone for joining us today.
As many of you know, President Biden grew up in Scranton, Pennsylvania — one of our first electrified cities. He saw what happened when manufacturing moved overseas under trickle-down, and he knows what American businesses and American workers are capable of when they’re given a fair chance to compete and win.
The President knows it is vital to invest in American manufacturing and workers and to enforce our trade laws to give our workers and businesses a fair chance to compete.
The President secured historic legislation to invest in key sectors that are vital to our future. And on his watch, real spending on factory construction has more than doubled and the economy has added nearly 800,000 new manufacturing jobs after both declined on his predecessor’s watch.
With this announcement, the President is taking important enforcement action to raise tariffs in key sectors under Section 301 of our trade laws that will make sure that historic investments in jobs spurred by President Biden’s actions are not undercut by a flood of unfairly underpriced exports from China in areas like EVs, batteries, vital medical equipment, steel and aluminum, semiconductors, and solar.
China is using the same playbook it has before to power its own growth at the expense of others by continuing to invest despite excess Chinese capacity and flooding global markets with exports that are underpriced due to unfair practices.
China is simply too big to play by its own rules.
The President’s actions reflect the conclusions of U.S. Trade Representative Katherine Tai’s mandatory four-year review that China continues to engage in unfair practices, such as forced technology transfer and restrictions and intellectual property theft from U.S. companies.
I will just briefly highlight some of the key actions.
The tariff rate will increase to 100 percent on Chinese electric vehicle imports to offset China’s unfair practices and subsidies and level the playing field for U.S. automakers and autoworkers.
These practices favor Chinese automakers at the expense of U.S. and other foreign automakers and autoworkers and are leading to a massive surge of unfairly underpriced Chinese vehicles into foreign markets. The President won’t let that happen here.
The tariff rate will double to 50 percent on solar cell imports from China. As a result of unfair practices, China’s anticipated manufacturing capacity in solar is more than double the forecasts of near-term global demand. High levels of non-market overcapacity have led to extreme concentration of production in China and underpriced exports that undermine fair competition.
China controls over 70 percent of global production in each step of the manufacturing process for solar, from polysilicon to solar modules, which creates unacceptable risks for our supply chains and clean energy goals.
We’re also closely monitoring attempts by Chinese firms to avoid our trade enforcement remedies outside of China.
The Section 301 tariff will increase to 25 percent, triple the current level, on certain steel and aluminum imports from China. The President recently called out unfair trade in steel and aluminum, where China controls over 50 percent of global production.
China’s steel producers rely on more carbon-intensive production processes. In contrast, U.S. industries are investing in decarbonization, supported by Department of Energy programs.
The President is committed to a stable bilateral relationship with China. He is committed to responsibly managing competition with China, and this action is consistent with that approach.
We are working with our partners around the world to address our shared concerns about China’s unfair practices. We know China’s unfair practices have harmed communities in Michigan, in Pennsylvania, and around the country that are now having the opportunity to come back due to President’s Biden’s investment agenda.
The President’s actions ensure that American business and workers have the opportunity to compete on a level playing field in industries that are vital to our future, such as clean energy and semiconductors.
The President is taking a tough strategic approach, combining investment at home with enforcement against China in key sectors, in contrast with the prior administration that failed to follow through either on investments, like Foxconn in Wisconsin, or on China’s trade commitments.
The previous administration’s phase one trade deal with China did not deliver on its promises to increase exports to Chi- — to China from the U.S., to create manufacturing jobs here in America, or to end China’s unfair practices.
The President’s approach also contrasts with proposals to impose an across-the-board tariff on all goods from all countries that would raise costs by $1,500 per year on each American family.
With that, I’m going to turn it over to my colleagues to respond to your questions. Thank you.
MR. KIKUKAWA: Thank you so much, Lael.
If you have a question, please raise your hand. I know some folks have already.
We will start with Josh Boak of the AP.
Q Hi. Thank you so much for doing this. I was hoping you might be able to spell out why you think raising these tariffs will continue competition without increasing the risks of conflict given China’s own economic development goals.
SENIOR ADMINISTRATION OFFICIAL: I’m happy to take that one. Look, these actions are designed to remedy the harm from China’s existing trade practices. We’ve been really clear — the President on down — that we seek a stable relationship with China. We don’t seek to undercut China’s development.
But when China is producing at a rate and with a trajectory that’s far in excess of any plausible estimate of global demand, that is going to flood the global market with supply that undercuts our ability to build productive capacity at home and that of our allies and those of emerging market countries as well. That reduces our supply chain resilience. That leaves all of us across the world more vulnerable to economic coercion. And that’s why we’re taking these actions.
But none of that is to take away from the efforts that the President has made to create a stable bilateral relationship. We’ve made that very clear directly with China. That’s our goal. It is not to escalate tensions, and we expect that they have a full understanding of why we’re taking these measures.
SENIOR ADMINISTRATION OFFICIAL: Let me jump in. This is [senior administration official]. I would just note that this issue has been part of longstanding conversations with Chinese officials in our channels, whether it’s Secretary Yellen, Secretary Raimondo, and Secretary Blinken, most recently. So, I don’t think these concerns will come as a surprise to Chinese interlocutors. We’ve also been quite clear the President feels the need to act on issues like this.
And, again, our diplomacy with China is not meant to indicate that we’re not going to have difference. We absolutely are. This is a competitive relationship at its core. That does not preclude, as [senior administration official] mentioned, the possibility of managing that competition responsibility. And that’s really what the President’s China policy is all about.
SENIOR ADMINISTRATION OFFICIAL: And I’ll just jump in. This is [senior administration official]. Just to underscore what [senior administration official] just said a minute ago, which is that these actions are very much focused on strategic and key sectors. They’re not broad based. Like previous actions, they are very narrowly targeting a set of sectors where we are prioritizing domestic investments and not to be in a world with overreliance on a single source.
MR. KIKUKAWA: Great. Thanks so much everyone. And apologies, I should have introduced our speakers on this call — or on background. For your awareness only and not for reporting, in order of who just spoke, it was [senior administration official], [senior administration official], and [senior administration official]. We also have [senior administration official] on the call.
With that, I’ll turn it over to Jeff Mason.
Q Thanks very much. A question on the car tariffs. Why did the U.S. decide to only put tariffs on EV cars and not all Chinese cars? And, secondly, can you speak a little bit to the politics of this? To what extent was this done now as a — as an effort to boost President Biden’s message going into the election? Thank you.
SENIOR ADMINISTRATION OFFICIAL: I’m happy to take that. This has nothing to do with politics. I mean, I think this review has been ongoing for a long time. I think we’ve been thoroughly studying and assessing how Chinese have been investing in their electric vehicle domestic industry and the range of unfair practices that are giving them a significant unfair pricing competitive advantage, so I think that’s the reason why we are moving towards a significant step up in the tariff rate for electric vehicles.
They’ve obviously built a EV industry behind a — their own tariff wall. I think it’s well known. I think you know this, which is Chinese have a 40 percent tariff on U.S. autos. And therefore, it was important for us to ensure that given their rapidly growing exports and excess capacity in the sector, that we put in the right safeguards.
MR. KIKUKAWA: [Senior administration official], you’re unmuted. Did you want to add anything?
SENIOR ADMINISTRATION OFFICIAL: No, no, I think [senior administration official] covered it well. I mean, we’ve made — EVs — EVs are where we’ve focused in terms of placing tariffs because that’s where we made hundreds of billions of dollars of public investments. And that’s — we’ve made those investments to build resilience in our clean technology supply chains, and so that’s our focus here.
MR. KIKUKAWA: Thanks. Apologies about that. I’ll turn it over to Demetri now.
Q Thank you. My understanding is that when Secretary Yellen was recently in Beijing, she did not tell her counterparts about the plan to triple tariffs on steel and aluminum. Can you say, did she outline the other tariff increases that are being imposed when she met her counterparts?
SENIOR ADMINISTRATION OFFICIAL: I can take a first stab at that one. Look, I don’t want to get into private diplomatic conversations and the specifics therein. But in general terms, I can say that our concerns about overcapacity have been clearly communicated through multiple channels, as has the intent to take action to address those concerns.
So, they’re not mutually exclusive — right? — the diplomacy part, talking to China about what we see, why we’re concerned, what we plan to do. But I think the difference that I would point out here is that we are also seeking to act to address those concerns directly.
Q [Senior administration official], if I could just follow on, do you expect Chinese retaliation? And if so, what sectors do you think they will target?
SENIOR ADMINISTRATION OFFICIAL: Yeah, look, I think many on this call have observed previous rounds on 301. So, I don’t want to speculate about what the — what precisely the Chinese will do here. I think, again, we’ve been pretty clear about our concerns. Where think — we think they’re based on longstanding issues: non-market policy and practices, trade technology, overcapacity. They’re concerns that are shared by others — the G7, the EU as well.
Again, don’t want to speculate on what the Chinese response would be. I would expect that they’ll be speaking out directly.
MR. KIKUKAWA: Thanks. We’ll now turn it over to Emily Peck.
Q Hi. Thank you for doing this. My question is: Wouldn’t giving Americans access to really cheap Chinese electric vehicles be good for American consumers and also bring down price pressure and inflation and also advance our transition to electronic — to electric vehicles? And (inaudible) —
SENIOR ADMINISTRATION OFFICIAL: I’m happy to —
Q Sorry, just to get it in. Does it also run the risk of leaving the U.S. behind ultimately if — if we are — if our, you know, auto industry is behind on this and our consumers aren’t driving these cars anymore while the rest of the world is advancing?
SENIOR ADMINISTRATION OFFICIAL: This is [senior administration official]. I’m happy to start. I mean, you’re right, the deployment of clean technology, it’s critical to address climate change. And that’s why China can’t be the only country that produces clean technology for the world. We need — we need diversified, not concentrated, production of our most critical goods and technologies. That — that was the lesson of the pandemic.
And if we have a level playing field, we and other countries will have the chance to compete. And that’s — that’s the kind of dynamic that we think will produce resilient supply chains and clean technology and give us our best chance of meeting our climate goals.
SENIOR ADMINISTRATION OFFICIAL: And I’ll just jump in and just add to what [senior administration official] said, which is when the President thinks about our, you know, clean energy transition, the President thinks about good American jobs. And I think, with the domestic investments that we have already made with BIL, CHIPS, and IRA, these investments are working and leading to a whole new investment, you know, (inaudible) in this country with new jobs.
I just don’t think that we need to make that trade-off. You know, cheap Chinese EVs that, you know, negatively impact U.S. businesses or workers does not further the cause of EVs in this country.
MR. KIKUKAWA: Thanks, both. I’ll now turn it over to Kayla Tausche.
Q Thank you so much, all, for — for doing this. I was wondering if you could elaborate on how the tariff levels were set for these items and on the timing, with some of these tariffs taking effect this year, some not taking effect until 2026.
And to follow on — on Emily’s question on the tariff rates themselves. I mean, an American consumer can buy an EV from China right now for $10,000. I mean, was there a determination that $20,000 was a threshold that would make it too expensive or prohibitive?
SENIOR ADMINISTRATION OFFICIAL: I can certainly jump in. I think [senior administration official] can also chime in. I think specifically on EVs, we — I think we looked at a series of indicators that point to continued price compression when it comes to China’s EV sector. Therefore, it was important to have a large enough step-up rate in the tariffs to ensure that we try to, like, level the playing field. I think that was a reason why we moved up to 100-percent tariff rates for EVs.
And I think on to your second question, some of the tariffs are kicking in in 2026 partly to allow for both a transition phase on batteries, where we’re beginning to see domestic production come online but not quite imminently to minimize market disruption whilst also sending a strong signal domestically that we are trying to, over time, reduce our reliance on China’s imports when it comes to batteries.
SENIOR ADMINISTRATION OFFICIAL: [Senior administration official], do you want to jump in? Otherwise, I’ll — I’m happy to say a bit more as well.
SENIOR ADMINISTRATION OFFICIAL: Feel free, [senior administration official]. Thanks.
SENIOR ADMINISTRATION OFFICIAL: Okay. Kayla, I mean, just what I would emphasize is this is a — this is a multistage process, and it’s, in a sense, multiplayer competition. We’re going to learn from each step of the process — from private-sector actors, consumers, from allies and partners, and from China. If we need to make further adjustments, we have the ability to do so. If we need to use other tools, many are available.
We’re already making unprecedented investments in our own EV manufacturing sector. We’re examining the potential national security threats presented by connected vehicles.
I would also emphasize that when you look across the world, our actions are not the only ones in the pipeline. We’re far from the only country that’s voicing concerns about Chinese overcapacity. Europe, Turkey, Brazil, India — many other countries are echoing our message, and several may follow with actions that amplify the effect of what we’re announcing tomorrow.
So, we’ll assess the interplay of all of these factors and then recalibrate as needed.
MR. KIKUKAWA: Thanks, [senior administration official] and [senior administration official]. I’ll now turn it over to Simon Rabinovitch.
Q Thank you very much. Just a quick one. You know, clearly at 102.5 percent, you don’t want to see Chinese EVs on U.S. roads. Why not just go with Senator Sherrod Brown’s proposal and ban them altogether?
SENIOR ADMINISTRATION OFFICIAL: I can just jump in and say we have not had a — you know, we don’t have a position on that specifically. I think this — these set of actions are very much just focused on the 301 statutory review. That’s been completed, and they are narrowly focused on several tariffs that are important to protect workers and industry within the U.S. strategic sectors, as opposed to anything broader and larger for now.
MR. KIKUKAWA: Thank you. Now turning it over to Josh Wingrove.
Q Hey. Thank you so much. Can you talk through the process about whether you considered offsetting reductions on other goods at all or whether that wasn’t seriously considered? In other words, something to balance the net effect of it to minimize the risk of retaliation.
SENIOR ADMINISTRATION OFFICIAL: I’m happy to start, Josh. I mean, we — look, China across the board continues to pursue an economic po- — model with policy distortions and unfair trade practices. And that means it has an unfair advantage across the full range of manufactured goods that it exports.
Now, I mean, I would point out, there’s a key difference in terms of what we’re announcing tomorrow and what we inherited. The previous administration’s restrictive efforts were not paired with affirmative inducements for companies to make investments in strategic sectors. It didn’t include a diplomatic effort to have likeminded countries that are playing by the same rules to join us in confronting China’s trade practices.
And so, this is a — this is a very different strategy in which tariffs are not a standalone strategy.
SENIOR ADMINISTRATION OFFICIAL: [Senior administration official], this is [senior administration official] just to add an additional thought. So, the President’s direction follows on a report from Ambassador Tai, the U.S. Trade Representative, (inaudible) of the effectiveness of the 301 tariff action to date.
And as you all will see in the report, part of what our conclusions or findings are is that China has not eliminated many of its forced technology transfer policies and practices, and instead has even become more aggressive in some of those actions, including through cyber intrusions and cyber theft that harm American workers and businesses.
So, it’s our view that China (inaudible) are truly not entitled to a reduction in tariffs in light of its behavior. And part of the recommendation that went from Ambassador Tai to President Biden was to find modifications or identify modifications to increase the effectiveness of the tariff action.
And so, as has been described, those are targeted and strong actions with respect to particular sectors and products, including trying to improve their impact — positive impact for the U.S. economy in these critical sectors in which the President has led these historic investments.
Thanks.
MR. KIKUKAWA: I think we have time for a few more questions. I’ll turn it over to Hans Nichols.
Q Hi. Thanks, guys, for doing this call. Just a quick housekeeping matter. The $860 billion that you guys are using, that’s CHIPS, IRA, and Bipartisan Infrastructure Act. And so, is that the sort of cosmic number you’d like us to use or you think is the most accurate for the investments that the President has made?
And then, secondly, I think we just got the answer to that question, but are the 301 sanctions on Trump’s $300 billion of goods still all in place? And is the correct number to use for the combined goods $318 billion?
SENIOR ADMINISTRATION OFFICIAL: I can take the $860 billion. That’s right. That’s basically the investments in — the private-sector investments that have been mobilized across these critical sectors.
Q Right. Okay. You said — you said private there, just so — just so I’m — you’re using that number as private, not on what the — okay. Thanks.
MR. KIKUKAWA: Yes. Just to clarify, if you go to Invest.gov, it will lay out all of these invest — like, which sectors we’re looking at in terms of private-sector investments.
Q And then on what’s happening to the Trump 301 $300 billion?
SENIOR ADMINISTRATION OFFICIAL: This is [senior administration official]. I’ll jump in. We can come back to you with a more precise number, but just to clarify that the existing Section 301 tariffs would remain in place generally without modification. The $18 billion would be a combination of additional products, plus increases of tariffs on some existing products.
And then we have to go back to 2017 numbers to give you kind of one unified number so it’s not just the, you know, $350 billion, approximately, plus 18 further.
MR. KIKUKAWA: Thanks —
Q Okay. And since no one has asked the question, I am just going to go ahead and ask it. Why are these not inflationary?
SENIOR ADMINISTRATION OFFICIAL: I’m happy to take that. I think inflation, as you know, has fallen about 60 percent. And this would not change that. There’s no inflationary impact of these actions. They’re mainly targeting strategic sectors where we are ramping up domestic investment.
I think what would be inflationary is more, you know, across-the-board, 10 percent type of tariff that would pose a real risk to consumers, which we’re not doing here. There are a very targeted set of tariffs on specific sectors.
MR. KIKUKAWA: And I’ll turn it over to Gavin Bade for our last question.
Q Hi. Thanks, all, for doing this. I just had a process question here. Did — last week, we saw some Democratic senators led by Majority Leader Schumer weigh in and ask you all to not lift any tariffs. I wonder: Did that letter have any –have any influence on your thinking here? Was that — was that in play as you guys were thinking about what you were going to do on these tariffs?
SENIOR ADMINISTRATION OFFICIAL: I think we’re all looking at each other virtually wondering who’s going to speak. This is [senior administration official]. And I’m happy to take that.
I mean, of course, we’ve received extensive public input, including a lot of views from Capitol Hill. On that specific letter, I mean, we’re aware of the input that came in. But this is a result of an extensive process of review in terms of trying to enhance the effectiveness of the tariffs.
It’s been a multiyear process at this point with a lot of internal deliberation. And so, the view was we really wanted to focus the action to strengthen the effectiveness of the tariffs with respect to these critical sectors, which, as we’ve talked about, are very important for a green transition, as well as to rebuild manufacturing in the United States, and, of course, jobs — all in the context of trying to address China’s forced technology transfer practices.
Thanks.
MR. KIKUKAWA: And since that was a short answer, I’ll take one more question from Justin Gomez.
Q Hi. Thanks for doing this call. I know you all just addressed the inflation part of this. But what can you tell Americans right now on what kind of impact they’re going to see from these tariffs in the near term and in the long term? What kind of — what kind of cost increases could they expect from this announcement?
SENIOR ADMINISTRATION OFFICIAL: 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 comeback that we’re seeing across communities that had long cycles of disinvestment. These tariffs will protect and safeguard those gains.
MR. KIKUKAWA: All right. Thank you everyone for your time.
If you have — I know there are a few people who have additional questions. Feel free to email them.
And as I mentioned at the top and in the email, this call is embargoed until 5:00 a.m. tomorrow.
Thanks, and have a nice day.
3:52 P.M. EDT
