The Biden Administration is raising duties on Chinese electric vehicles (EV) to over 100 percent that are part of number of tariff increases announced May 14.
President Joe Biden unveiled the new policy on an array of Chinese imports affecting $18 billion in trade, including steel and aluminum, semiconductors, EV batteries, critical minerals, solar cells and cranes.
The move comes as sales for EV’s have stalled in the U.S. while inventory has grown on the lots of dealers. In a Reuters story, analysts have warned that a possible trade war could raise costs for EVs overall, hurting the President’s climate goals and his aim to create manufacturing jobs.
Chinese Electric Vehicles
“With extensive subsidies and non-market practices leading to substantial risks of overcapacity, China’s exports of EVs grew by 70 percent from 2022 to 2023—jeopardizing productive investments elsewhere,” said the Biden Administration in a fact sheet announcing the actions. “A 100 percent tariff rate on EVs will protect American manufacturers from China’s unfair trade practices.”
A number of lawmakers had previously lobbied for hikes on Chinese vehicle tariffs or an outright ban over data privacy concerns despite relatively few Chinese-made light-duty vehicles being delivered to the U.S.
The actions by President Biden will increase tariffs from 25% to 100% on EVs and from 7.5% to 25% on lithium-ion EV batteries. The tariffs on ship-to-shore cranes will rise to 25% from zero.
More tariffs will follow in 2025 and 2026 on semiconductors, as well as lithium-ion batteries that are not used in electric vehicles, graphite and permanent magnets as well as rubber medical and surgical gloves.
Economic Politics
China immediately vowed retaliation as its commerce ministry said Beijing was opposed to the U.S. tariff hikes and would take measures to defend its interests, urging the U.S. to cancel the measures.
President Biden is keeping tariffs put in place by Donald Trump while ratcheting up others, including doubling the duties on semiconductor tariffs to 50 percent. In a statement, White House officials cited “unacceptable risks” to U.S. economic security posed by what it considers unfair Chinese practices that are flooding global markets with cheap goods.
The U.S. imported $427 billion in goods from China in 2023 and exported $148 billion to the world’s No. 2 economy, according to the U.S. Census Bureau.
Slowing EV Car Sales
The move comes as dealers and the Biden Administration have clashed when it comes to the current administrations push on EVs. President Biden previously set a goal of ensuring 50 percent of car purchases are electric by 2030.
The story of the current EV market is mixed as sales are slowing down. In the first quarter of 2024, Americans bought 268,909 new EVs, up 2.6 percent increase from the first three months of 2023.
But those figures were down 15.2 percent decrease from the previous quarter. And EVs made up 7.3 percent of total new-vehicle sales in the first quarter of 2024, a decrease from the fourth quarter of 2023.
