Biden Administration Quadruples Tariffs on Chinese EV Materials

The Biden administration has announced an escalation in trade measures against Chinese EVs, unveiling a suite of new tariffs targeting critical sectors. This move, framed as a strategy to bolster American industries and jobs, will quadruple tariffs from 25% to 100% on key imports for EV production.

The tariffs will be phased in over the next three years and target industries where China has a competitive edge or dominates global supply chains. Besides EVs, the administration is doubling tariffs on semiconductors from 25% to 50%, raising tariffs on lithium-ion batteries and their components to 25%, and increasing duties on solar cells to 50%. Other affected imports include medical supplies such as syringes and needles, ship-to-shore cranes, and various steel and aluminum products.

In a statement, the White House emphasized the intention behind these tariffs: "Workers and businesses in the United States can outcompete anyone — as long as they have fair competition. But for too long, China’s government has used unfair, non-market practices."

Biden’s administration has been calling for actions like these as early as February. Additionally, Treasury Secretary Janet Yellen asserted that the US would not permit a repeat of the "China shock" of the early 2000s, which resulted in the loss of 2.4 million US manufacturing jobs. 

Chinese Response

The China Association of Automobile Manufacturers labeled the tariffs as "protectionist and isolationist," rejecting accusations of industrial overcapacity and national security threats. Fu Bingfeng, the association's Executive Vice President, called for "an open mind and a global vision" for the robust development of the automotive industry.

The impact on Chinese EV manufacturers, who have been increasingly investing in EV technology and related industries, is expected to be significant. While Chinese EVs currently hold a minimal presence in the US market due to existing tariffs, the new measures could further limit their entry. 

These tariffs could complicate the Biden administration's climate goals, particularly its ambitious EV adoption targets. The administration's April standards aim to increase the share of EVs in the US market from 8% to as much as 56% by 2032. However, US automakers have expressed concerns that higher tariffs on Chinese batteries and components could make EVs prohibitively expensive for consumers.

Industry analysts note that the immediate consumer impact of higher EV tariffs might be minimal. Nevertheless, the broader economic repercussions, including potential retaliatory measures from China, remain a concern. Chinese retaliatory tariffs could adversely affect US manufacturers exporting to China, such as BMW’s factory in Spartanburg, South Carolina, and Mercedes-Benz’s plant in Alabama.

Michael Dunne, a consultant with extensive experience in the Chinese auto industry, believes the tariffs provide "important time" for the US to catch up with China in EV and battery supply chains. However, others warn that reducing competitive pressure from Chinese EV manufacturers could backfire, potentially mirroring past experiences with Japanese automakers in the 1970s and 1980s.