Biden Administration Imposes 100 Percent Tariff On Chinese EVs
The Biden Administration has imposed a 100 percent tariff on Chinese-made electric vehicle (EV) market – in a move sure to inflame trade tensions with Beijing.
The White House and the US Department of Commerce both announced the new tariffs on Tuesday, which they said were designed “to protect American workers and businesses from China’s unfair trade practices.”
The move is not unexpected, after it was reported last week that US President Joe Biden was set to announce new tariffs on China that target strategic sectors including electric vehicles.
BYD’s Sea Lion 07. Image credit: BYD
EV tariffs
“President Biden’s economic plan is supporting investments and creating good jobs in key sectors that are vital for America’s economic future and national security,” said the White House. “China’s unfair trade practices concerning technology transfer, intellectual property, and innovation are threatening American businesses and workers.”
“China is also flooding global markets with artificially low-priced exports,” the White House added. “In response to China’s unfair trade practices and to counteract the resulting harms, today, President Biden is directing his Trade Representative to increase tariffs under Section 301 of the Trade Act of 1974 on $18 billion of imports from China to protect American workers and businesses.”
So what exactly are the more stringent curbs on Chinese goods worth $18bn?
The tariffs are as follows:
Steel and aluminium: the tariff rate on certain steel and aluminium products under Section 301 will increase from 0-7.5 percent to 25 percent in 2024.
Semiconductors: the tariff rate on semiconductors will increase from 25 percent to 50 percent by 2025.
Electric vehicles (EVs): the tariff rate on electric vehicles under Section 301 will increase from 25 percent to 100 percent in 2024.
Batteries, battery components, and critical minerals: the tariff rate on lithium-ion EV batteries will increase from 7.5 percent to 25 percent in 2024, while the tariff rate on lithium-ion non-EV batteries will increase from 7.5 percent to 25 percent in 2026. The tariff rate on battery parts will increase from 7.5 percent to 25 percent in 2024. The tariff rate on natural graphite and permanent magnets will increase from zero to 25 percent in 2026. The tariff rate for certain other critical minerals will increase from zero to 25 percent in 2024.
Solar cells: the tariff rate on solar cells (whether or not assembled into modules) will increase from 25 percent to 50 percent in 2024.
The United States is also imposing tariffs on ship-to-shore cranes, as well as medical products such as syringes, needles, and personal protective equipment (PPE).
Some feel that Biden’s EV tariffs are largely symbolic as Chinese EVs were already subject to US tariffs imposed by Donald Trump during his presidency. But the decision by the Biden Administration to raise the tariff to 100 percent ensures that Chinese-made EVs are effectively locked out of the US market in the years ahead.
“President Biden is taking decisive action to ensure unfair trade practices do not threaten our competitiveness and economic security, while also strengthening American manufacturing. This is a strategic approach to trade policy that will help protect key U.S. industries, like the clean energy and semiconductor sectors,” said US Secretary of Commerce Gina Raimondo.
US Secretary of Commerce Gina M. Raimondo. Image credit US Government
“We know the PRC’s playbook – we’ve seen their non-market actions on solar and steel – and cannot allow China to undermine US supply chains by flooding the market with artificially cheap products that hurt American businesses and workers,” said Raimondo.
The new tariffs will begin 90 days from Tuesday – meaning sometime in August 2024.
It should be remembered that Tesla and other major car makers including Volvo, Ford and Mercedes-Benz actually sued the US government in September 2020 in protest at the tariffs imposed by Donald Trump on Chinese imports.
They sought to end what it described as President Trump’s “unlawful” tariffs on Chinese-made components, and Tesla also sought a refund on all duties paid – plus interest.
In March 2023 the Court of International Trade ruled in favour of the federal government, leaving the tariffs in place for now.
The case is currently at the Court of Appeals for the Federal Circuit.
Meanwhile China’s state mouthpiece news outlet published an editorial on Wednesday, accusing the US of “undermining fair trade and environmental protection”, while saying that it was US consumers who would bear the brunt of the tariffs, the Guardian newspaper reported.
“Ironically, the United States is a country that touts open economy and free trade, but its actions are against its words. It also promises that it does not seek to decouple from China and hinder China’s development, but its practices tell another story,” it reportedly said.