WASHINGTON (TND) — The Biden administration is quadrupling tariffs on Chinese electric vehicles as part of a series of new tariffs that also includes steel, solar cells and other key components aimed at countering its dominance in the market as U.S. automakers have scaled back their plans amid slumping demand.
President Joe Biden is set to announce a batch of tariffs on Tuesday aimed directly at Beijing, a move certain to flare up tensions with the world’s No. 2 economy and chief rival that is also likely to result in new tariffs and taxes placed on American products. The tariffs, which touch on several pieces of the EV supply chain and other technology, will be phased in over the next three years.
Tariffs that will go into effect this year include hikes on EVs, solar cells, steel, aluminum and other medical supply items. The U.S. has been working to figure a way around China’s dominance in refining minerals that are key to EV batteries as well as how to counter the low prices its automakers can offer thanks to heavy subsidies.
“President Biden and I have seen firsthand the impacts of surges of certain artificially cheap Chinese imports on American communities in the past, and we will not tolerate that again,” Treasury Secretary Janet Yellen said in a statement. “These overcapacity concerns are widely shared by our partners across advanced economies and emerging markets, motivated not by anti-China policy but by a desire to prevent damaging economic dislocation from unfair economic practices.”
Beijing has long faced accusations of propping up its own manufacturing and energy sectors with extreme subsidies and other means that make Chinese products significantly cheaper than other countries and flooding the markets.
"Prices are unfairly low because Chinese companies don't need to worry about a profit because the Chinese government subsidized them and subsidized them heavily," Biden said in a speech at the White House. "Chinese relies on other anticompetitive tactics as well, like forcing American companies to transfer their technology in order to do business in China."
Beijing has already come out against the sanctions and said it will take “all necessary actions” in response to them.
"Despite its professed willingness to strengthen cooperation with China on climate change, the U.S. has been hyping up the so-called 'overcapacity' in China's new energy sector and vowing to impose additional tariff hikes on Chinese electrical vehicles and solar products," Chinese embassy spokesperson Liu Pengyu said.
Biden has tried to bolster U.S. manufacturing and counter China through billions in investments made in the Inflation Reduction Act, a bipartisan bill increasing semiconductor production and the new tariffs directly targeting Chinese exports.
The new tariffs include increasing the tax rate on Chinese EVs from 27.5% to 102.5% this year, doubling the rate on solar cell imports to 50%, certain steel and aluminum products will increase to 25% this year and computer chip tariffs will double to 50% next year. Lithium ion batteries for electric vehicles will see an increase from 7.5% to 25% this year.
The new fees expand on tariffs Donald Trump put into place in 2018. Then-candidate Biden criticized the tariffs when he ran for the White House. The former President vowed to do even more if he was re-elected and commented on the new action on his way into court Tuesday.
“He wants to put a big tariff on China, which is a suggestion I said. Where have you been for 3 and a half years? I said you should’ve done it a long time ago," Trump told reporters.
China expert Gordon Chang with the Gatestone Institute says politics are at play with the announcement of the tariffs now.
“It’s really good that the U.S. is increasing tariffs on China’s green goods, but if President Biden were serious he would’ve done this a long time ago. The fact that this is so close to the November election really casts doubts on his motivation," Chang said.
Biden’s announcement comes after multiple U.S. automakers scaled back or delayed plans to roll out more electric offerings this year due to underperforming sales. Ford, General Motors and others have all made announcements about slower timelines for EV expansion.
Earlier this month, the government loosened some rules in a move to make it easier for more electric vehicles to qualify for tax credits worth up to $7,500 in hopes of boosting demand in the U.S. The tax credits have strict requirements and complex rules governing them that disqualify any vehicle that includes a certain amount of components from China and other “nations of concern.”
American-made EVs are much more expensive than those made in China, which can be purchased for as low as $12,000 thanks to subsidies from its government along with the country’s dominance of several pieces of the EV supply chain that also keep prices cheaper. There are very few Chinese EVs traveling on U.S. roads today but there are concerns about those levels growing if pricing between vehicles doesn’t get closer.
"Fact is American workers can outwork and out-compete anyone, as long as the competition is fair," Biden said. "For too long it hasn't been fair. For years, the Chinese government has poured state money to Chinese companies across a whole range of industries."
A report published last month by the International Energy Agency said Chinese automakers accounted for 60% of all EV sales in 2023.
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