White House Announces New Tariffs on Imported Chinese EVs and Goods

The White House announced new measures that will include a 100% border tax on Electric Cars from China, saying it is a response to unfair trade policies and intended to protect US auto sector jobs. The White House announced new measures that will include a 100% border tax on Electric Cars from China, saying it is a response to unfair trade policies and intended to protect US auto sector jobs.

The White House announced it would increase tariffs on some Chinese imports including electric vehicles, computer chips and medical products, citing “unacceptable” risks to the U.S economy.  The increases will impact $18 billion in Chinese imports including electric cars, steel and aluminum, semiconductors, batteries, critical minerals, and solar panels.

This year the Biden administration will increase tariffs on electric vehicles from 25% to 100% under Section 301 of the Trade Act of 1974. The increase brings the total duties on Chinese EVs to 102.5%.  Lithium-ion EV batteries will rise from 7.5% to 25% along with a similar rise on other battery parts.  Photovoltaic cells used to make solar panels will get a 25% to 50% hike. "Certain" critical minerals used in EV battery production will have their tariffs raised from zero to 25%.

Lael Brainard, top economic adviser to President Biden. 

In 2025 and 2026 tariffs will increase on semiconductors, whose tariff rate will double to 50%. "We know China's unfair practices have harmed communities in Michigan and Pennsylvania and around the country that are now having the opportunity to come back due to President Biden's investment agenda," Lael Brainard, Biden's top economic adviser said. 

China currently leads the global market for electric vehicles and their component parts. Today there are relatively few Chinese-made light-duty vehicles being imported into the U.S but components for EVs are a different matter.  According to Bloomberg News, more than 80% of EV battery cells are made in China with Chinese companies dominating the component minerals market, with lithium, cobalt, and manganese largely cornered by China.

Analysts have suggested the tariffs could increase EV production costs across the board in the U.S., potentially upending the Biden administrations clean car agenda along with disrupting global markets. “Any car company that’s not paying attention to them as a competitor is going to be lost when they hit their market,” said Sam Fiorani, a vice president at AutoForecast Solutions near Philadelphia. “BYD’s entry into the U.S. market isn’t an if. It’s a when.”

Senator Josh Hawley (R-MO) and Senator Sherrod Brown (D-OH)

There have been bipartisan calls over the past six months from members in Congress for large hikes on Chinese vehicle tariffs. Senate Banking Committee Chairman Sherrod Brown (D-OH) has called for an outright ban on Chinese EVs in the U.S, over concerns they pose risks to the U.S economy and U.S drivers personal data. “Chinese electric vehicles are an existential threat to the American auto industry,” Brown wrote in a letter to President Biden in early April, “Ohio knows all too well how China illegally subsidizes its companies, putting our workers out of jobs and undermining entire industries, from steel to solar manufacturing. We cannot allow China to bring its government-backed cheating to the American auto industry. The U.S. must ban Chinese electric vehicles now and stop a flood of Chinese government-subsidized cars that threaten Ohio auto jobs, and our national and economic security.”  

In March U.S. Sen Josh Hawley (R-MO.) introduced the Protecting American Auto Workers from China Act, a bill that would raise tariffs on autos imported from China to 125%. The bill looks to deter Chinese automakers from trying to evade U.S. trade laws by producing electric vehicles in Mexico’s free trade zone for import to the U.S.  The Teamsters have backed the Hawley bill and are fighting for legislation to ensure the number of electric vehicles sold in the U.S. does not result in unsafe increases to existing weight restrictions on automobile transporters. On average an EV is about 300 lbs. heavier than its ICE equivalent.     

Chinese EV maker BYD’s 5-door compact Dolphin Mini Plus is selling in Mexico for U.S 21,000, with cheaper models to come.

Under pressure from U.S officials to keep Chinese automakers out of the N.A free trade zone, the Mexican government has been holding off offering Chinese automakers incentives to ship EVs to Mexico and on offers for low-cost public land for Chinese auto companies to build EVs in the free trade zone In 2023, 20% of the light vehicles sold in Mexico were imported from China, an increase of 50% compared to 2022.

U.S. Commerce Secretary Gina Raimondo said the U.S. could take “extreme action” and ban Chinese connected vehicles or impose restrictions on them. The Biden administration has been conducting a national security investigation into electric vehicles made in China since late last year..

The White House will continue tariffs that the Trump administration placed on more than $300 billion in Chinese imports, a move that kicked off a tariff war, something the Biden administration is looking to avoid.  

Rate this item
(1 Vote)
Last modified on Thursday, 16 May 2024 13:54