Biden administration weighs tariff increase on Chinese-made EVs

The Biden administration wants to put more electric vehicles (EVs) on American roadways, just not Chinese-made models. According to The Wall Street Journal, the White House is considering raising the nation’s tariff on imports of automobiles from China.

It would mark the second time a tariff increase like this has occurred since 2018, when former President Donald Trump hiked the rate from 2.5% to 27.5%. This year, the current administration has already taken things a step further, blocking tax breaks for all foreign-made EVs.

President Joe Biden also issued new rules preventing American car companies from accessing incentives if they use parts or raw materials sourced from China to make electric vehicles domestically.

“President Biden entered office determined to reverse the decades-long trend of letting jobs and factories go overseas to China,” John Podesta, a senior adviser to the president on clean energy innovation. “We’re helping ensure that the electric vehicle future will be made in America.”

Chinese vehicle exports have been trending upwards over the several years, expected to jump by 25% in 2024 as they are now making their way into European markets. The influx of vehicles made in China is expected to collectively cost Europe’s carmakers over $7 billion in profits by 2030.

“Global markets are now flooded with cheaper Chinese electric cars and their prices kept artificially low by huge state subsidies,” said European Commission President Ursula von der Leyen. “This is distorting our market.”

U.S. officials see Chinese electric cars as a threat to the American auto industry. On average, EV models in the U.S. can cost more than twice what they do in China, a price point fueled by Beijing’s 90% stranglehold over the global EV supply chain and about $130 billion in state subsidies for the industry since 2016.

The potential for further increases on Chinese-made vehicle tariffs comes after a bipartisan group of U.S. lawmakers asked the Biden administration in November to do exactly that.

“It is critical that tariffs on [Chinese] automobiles not only be maintained but also increased to stem the expected surge in [Chinese] imports,” the lawmakers wrote in a letter to the Office of the United States Trade Representative, adding that an investigation should be launched into Chinese vehicles “and the harm they pose to the American automotive industry and American workers.”

The group of lawmakers also called for a probe into ways the U.S. can prevent China from importing vehicles into the country via Mexico, where three major Chinese EV companies are now planning to build new factories with an eye on American consumers.

“China has a bigger manufacturing scale than all other countries,” Biden said. “And they’re using that scale to make these batteries not just in China, but they’re making them in Germany, and in Mexico. And now exporting those electric vehicles around the world with sites on the American market, and they think they’re gonna win.”