How Much will Biden’s Tariffs Raise?
President Biden recently announced increases to a number of tariffs on Chinese imports, including for lithium-ion batteries, electric vehicles, and semiconductors. Based on our understanding of the tariffs, we estimate they will increase revenue by about $15 billion over the next decade.
Specifically, President Biden has announced the following increases:
- Steel and Aluminum: from 0-7.5 percent to 25 percent in 2024
- Semiconductors: from 25 percent to 50 percent by 2025
- Electric Vehicles: from 25 percent to 100 percent in 2024
- Lithium-Ion EV Batteries: from 7.5 percent to 25 percent in 2024
- Lithium-Ion Non-EV Batteries: from 7.5 percent to 25 percent in 2026
- Battery Parts: 7.5 percent to 25 percent in 2024
- Natural Graphite and Permanent Magnets: 0 percent to 25 percent in 2026
- Certain Other Critical Minerals: 0 percent to 25 percent in 2024
- Solar Cells: 25 percent to 50 percent in 2024
- Ship-to-Shore Cranes: 0 percent to 25 percent in 2024
- Syringes and Needles: 0 percent to 50 percent in 2024
- Certain Personal Protective Equipment (PPE): 0-7.5 percent to 25 percent in 2024
- Rubber Medical and Surgical Gloves: 7.5 percent to 25 percent in 2026
The Administration estimates these tariffs would apply to about $18 billion of annual imported goods, which we estimate would be about $200 billion of the $5.4 trillion of Chinese imports currently projected over the next decade.
Based on our understanding of the tariffs – and there remains significant uncertainty – they would boost the average tariff rate from around 10 percent to 28 percent on those goods.
On a static basis – assuming import levels do not change in response to the rise in tariffs – we estimate that over a decade the tariffs would generate about $30 billion in net new revenue. However, the significant hikes in tariffs would reduce trade with China (as intended), which we estimate would lower the net revenue gain to about $15 billion over a decade based on elasticities consistent with trade literature.
We estimate the tariffs will virtually end imports of electric vehicles from China, forgoing about $1 billion of duties over a decade under the prior tariffs.
Net Revenue Impact of President Biden's New Tariffs
| Fiscal Years 2025-2034 | |
|---|---|
| Static (no change in trade) | +$30 billion |
| Conventional | +$15 billion |
Sources: Committee for a Responsible Federal Budget, U.S. Census Bureau, and Congressional Budget Office.
Notes: Conventional estimates assume tariffs would reduce import levels consistent with an import elasticity of 1.7 and that roughly half the tariff revenue would be subject to income and payroll tax revenue offsets.
Importantly, our estimates are rough and based on our current understanding of Biden’s new tariffs.
Our estimates also do not incorporate macroeconomic effects, which could lower the revenue gain and possibly create a revenue loss. However, revenue is also not the stated goal of the tariffs – the Administration states it is aiming these tariffs at strategic sectors in an effort to counter China’s unfair trade practices, and proponents of tariffs like these often cite specific benefits – including reducing economic reliance on China, helping support some domestic industries, and strengthening our national security.
