Center for American Progress

The Biden Administration’s Targeted, Strategic Tariffs Are Effective Industrial Policy at Work
Photo shows a worker in a neon green vest and protective gear placing a battery on a metal conveyor belt with overhead lights in the background
A technician at an electric vehicle recycling plant in Covington, Georgia, places electric vehicle batteries on a conveyer belt, March 2023. (Getty/Alyssa Pointer/The Washington Post)

The Biden administration’s recent action to raise tariffs on strategic goods imported from China has raised both praise and sharp critiques. Most critiques fall into two categories, with some lamenting the tariffs as an affront to the supposed free-trade ethos of the past, arguing that tariffs would lead to higher inflation or higher prices, or both. Others have noted the apparent contradiction between the administration’s push to address the climate crisis by accelerating a green transition to cleaner technologies and the potentially slower deployment that comes with higher costs.

Upon closer inspection, these critiques do not hold up. Instead, what emerges is an administration committed to ensuring that American workers remain at the forefront of the world’s transition to a cleaner future and one that fully understands the need for climate action to remain politically sustainable and resilient.

The Biden administration’s approach of coupling smart, strategic, targeted tariffs with actual investment in American industry is delivering enormous results.

In the case of the Biden administration’s tariffs announced earlier this month, the impact on prices and inflation will likely be low to nonexistent. The tariffs apply to only a small amount of strategic goods, which, at the moment, are not imported in significant quantities from China. As The Wall Street Journal noted, “Tariffs on just $18 billion in goods are unlikely to filter broadly across the economy, and therefore inflation.”

Yet that does not mean the tariffs are unimportant. On the contrary, as Paul Krugman noted in his New York Times column, the tariffs serve as a “shot across the bow,” alerting China that the Biden administration will not allow a surge of subsidized and often illegal—especially given the use of forced labor in China’s Xinjiang province—imports to undercut its investments in technologies, such as semiconductors, electric vehicles (EVs), and solar panels, that will define the future. In fact, absent the administration’s actions, it is quite possible—even likely—that China would flood the American domestic market with these goods, stifling competition and innovation in the long run.

The Biden administration has spurred enormous private investments in rebuilding the United States’ manufacturing base, but those investments are also the American peoples’ investment. The Biden administration would not be a good steward of taxpayer dollars, or of the U.S. economy more broadly, if it let China’s nonmarket practices undercut America’s investments in rebuilding long-term industrial competitiveness. And it certainly would not be the champion of working people that the administration’s worker-centric trade policy demonstrates if it left U.S. workers susceptible to a deluge of predatory Chinese imports.

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U.S. workers have already experienced the impact of China’s exploitative overcapacity. The decline in employment in the domestic steel industry, for example, left communities hollowed out and people’s livelihoods turned upside down, with predictable social, cultural, and political consequences. The administration clearly is committed to making sure another “China shock” does not occur—and most Americans will agree, having experienced the impact of the previous shocks on American manufacturing, the middle class, and communities across the country.

Americans also saw the impact of a world relying too much on China for the goods on which critical supply chains rely. It is critical to the country’s economic and national security that the United States bring more manufacturing back to its shores and work with its partners and allies to build more resilient and diversified supply chains. Not surprisingly, other nations are following the Biden administration’s lead. The European Union recently launched an investigation to consider tariffs on Chinese EV imports. Canada is also considering tariffs to blunt the surge of imports pressuring its domestic industry, as are several countries in Latin America.

Allowing China to be the world’s sole supplier of the technologies that will define the future threatens to put the United States and its allies in the same situation the United States once found itself in with fossil fuels and the Middle East—that is, heavily dependent on a single region for the supply of a good on which the entire economy relied. And that says nothing of China’s support for Russia’s invasion of Ukraine or threats to democracy elsewhere in the world. The fact is, if the United States wants a more resilient, diversified supply chain, then it needs to take steps to reorient global markets. That will not happen on its own, particularly as China appears intent on using its nonmarket practices to subsidize its exporters and unfairly capture market share around the world.

Explore how the Biden administration’s economic policies have spurred projects in communities across the country

The second critique—that increasing the cost of Chinese imports would slow the deployment of the technologies needed to address climate change—likewise deserves reexamination. In the solar sector, for example, the United States does not import many solar cells directly from China, thanks in part to existing tariffs and other trade remedies already in place. According to the International Energy Agency, more than 45 gigawatts of new solar panels—roughly equal to a full year’s worth of new solar deployment in the United States—are sitting in warehouses across the country. By the time these panels are fully deployed in the United States, the industry will have had time to strengthen its domestic manufacturing capacity, largely thanks to a combination of incentives and investments enacted by the Biden administration.

In the semiconductor industry, the administration’s unprecedented investments through the CHIPS and Science Act have put the country on a path to making 20 percent of the world’s most advanced microchips, a number that would have been unfathomable just a few years ago. This is not increasing costs for consumers; it is instead making sure that American industry and American consumers are not at the mercy of China’s nonmarket practices and the supply disruptions that could result from China’s stranglehold on the global market. It will also help prevent a replay of 2021, when semiconductor supply chain issues in Asia stopped U.S. auto assembly lines.

In the EV industry, the administration’s investment in EV production through the Inflation Reduction Act (IRA), coupled with stronger pollution standards and a nationwide rollout of EV charging stations, has spurred U.S. automakers to invest heavily in American EV manufacturing. The number of EVs sold in the United States has more than quadrupled since the Biden administration took office, and new EV battery and battery component manufacturers have likewise greatly expanded their domestic production. The administration and Congress should take further steps, though, to ensure that American automakers do not use the protection offered by the Biden administration’s tariff actions to slow the deployment of affordable, quality EVs, which several automakers have already started doing.

It is important to consider the deployment of clean technologies—and of sustaining climate action more broadly—in terms of continued investment, progress, and long-term, high-quality job creation. Any enduring climate action requires lasting political support, and that requires constituents who will hold their leaders accountable—something far more likely if those same constituents have benefited, and will continue to benefit, from investments in a clean energy industry that supports American workers with high-quality union jobs. Seen in this light, the administration’s tariff actions are another step toward achieving this important end.

A clear contrast

The previous administration tried a trade approach that relied only on tariffs and corporate tax cuts, and it failed to solve the big problems facing domestic production. It did not truly reorient global supply chains away from China, nor did it rebuild American industrial might. By contrast, the Biden administration’s approach of coupling smart, strategic, targeted tariffs with actual investment in American industry is delivering enormous results.

The Biden administration’s industrial policy success is apparent in the scale of private sector investment flowing into American manufacturing for the first time in generations. To date, the investments made through the Infrastructure Investment and Jobs Act, the CHIPS and Science Act, and the IRA have spurred more than $860 billion in new private sector investment in American manufacturing, much of it supporting the transition to a cleaner, more resilient future. The U.S. manufacturing sector is expanding, modernizing, and growing more competitive by the day, creating a foundation of American industrial competitiveness that will pay dividends for years to come.

The Biden administration’s investment agenda has helped to create nearly 800,000 new manufacturing jobs, and new factory construction has doubled—two metrics that fell under the previous administration. Private investment in U.S. manufacturing construction hit $225 billion in 2024, a record high even adjusting for inflation. Not coincidentally, the trade deficit with China is the lowest it has been in a decade.

As Rana Foroohar points out in the Financial Times, trade policy must adapt to the needs of the modern world—in this case, a world defined increasingly by climate change and an overreliance on China: “Saying so isn’t protectionist. It’s realistic.”

For years, President Biden has said, “when I hear ‘climate,’ I think ‘jobs’.” The administration has demonstrated again and again that it is possible for the United States to lead the world’s clean energy transition and deliver high-quality union jobs and opportunities for workers across the country. The tariff actions are yet another example of turning that pledge into reality.

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Ryan Mulholland

Senior Fellow, International Economic Policy

Mike Williams

Senior Fellow


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