Two experts from Crowe LLP — Dan Swartz, principal in the accounting and consulting firm’s customs and trade practice, and Devin Hall, tax partner and managing partner in the energy practice, speculate on the impact of the most recent round of tariff increases by the U.S. on goods imported from China.

The U.S. Trade Representative, having received more than 1,000 comments from the trading community, delayed by 30 days its announcement of the latest round of tariff increases on Chinese imports, with the details expected to be revealed in late August. Products likely to be impacted included solar cells, semiconductors, ship-to-shore cranes, steel and possibly medical items.

The new tariffs add to those previously imposed by the Trump Administration and retained by the Biden Administration. USTR’s proposal called for an increase in steel tariffs from 7.5% to 25%, along with a doubling of those on Chinese-produced semiconductors, and additional increases on solar products.

The earlier tariffs have already prompted manufacturers selling into the U.S. to lessen their reliance on production within China, instead building plants in Mexico and other parts of Asia. In some cases, they have relocated plants to the U.S., taking advantage of financial incentives provided by the Inflation Reduction Act and CHIPS and Science Act of 2022. Mexico in particular is beginning to witness “a huge industrial boom,” Swartz says.

The growing reliance on tariffs to address U.S. concerns about China’s trade practices has retrospectively soured “policy wonks” on the wisdom of admitting China to the World Trade Organization in 2001, Swartz says. That was supposed to lead to the opening of China’s markets and a relaxation of government control of business.

Hall says the new tariffs on Chinese electric vehicles and solar products will have a negative impact on the development of clean-energy industries, although he expects to see more foreign investment in U.S. manufacturing as a result.