Protecting American Workers: The Biden Administration's New Tariffs on Chinese EVs

By Felix Richter, May 15, 2024

The Electric Vehicle Market in China

On Tuesday, the Biden administration formally announced plans to increase tariffs on $18 billion worth of imports from China. This move aims to “protect American workers and businesses” from what the administration considers “unfair trade practices.” Among the targeted sectors is the electric vehicle (EV) industry, where the White House has heavily invested to create and sustain American jobs.

The Tariff Hike on Chinese EVs

One of the most significant changes in this new tariff policy affects electric vehicles. Duties on Chinese EVs are set to quadruple from 25% to 100%. This decision comes in response to a dramatic increase in Chinese EV exports over recent years. Since 2021, Chinese exports of battery electric vehicles (BEVs) have surged, reaching $34 billion last year. Although the U.S. imported less than $400 million worth of EVs from China last year, the tariff hike is seen as a preemptive measure to protect U.S. carmakers from potential competition.

“With extensive subsidies and non-market practices leading to substantial risks of overcapacity, China’s exports of EVs grew by 70% from 2022 to 2023 – jeopardizing productive investments elsewhere,” the White House statement reads. The new tariff rate aims to safeguard the Biden administration’s investments in the EV market and preserve jobs in the industry from “unfairly priced” Chinese EVs.

Global Reactions to China's EV Push

The U.S. is not alone in its response to China’s expanding EV market. In October 2023, the European Commission launched an investigation into subsidised electric cars from China. This investigation seeks to determine whether Chinese BEV value chains benefit from “illegal subsidization” that “causes or threatens to cause economic injury to EU BEV producers.” Earlier this month, EU Trade Commissioner Valdis Dombrovskis indicated that the investigation was “advancing” and that tariffs could be imposed before the summer break.

China’s Dominance in the EV Market

In recent years, China has emerged as the world's largest electric car market. To achieve this, the Chinese government has implemented a series of policies and incentives to promote electric vehicle (EV) adoption. These measures include subsidies, tax breaks, and a credit system requiring car makers to meet specific quotas, similar to a carbon credit trading scheme. These policies have significantly boosted the production and export of Chinese EVs, leading to a rapid expansion in the global market.

Conclusion

The Biden administration’s decision to increase tariffs on Chinese EVs reflects a broader strategy to protect American industry and jobs from what it views as unfair competition. By imposing higher duties, the administration aims to level the playing field for U.S. carmakers and ensure that investments in the EV sector yield sustainable growth and employment. As other nations like the EU also scrutinize Chinese EV imports, the global landscape of the electric vehicle market continues to evolve, with significant implications for international trade and economic policy.

For more insights on global trade and industry news, follow #ExportUnlocked. Stay informed and stay ahead in the competitive world of international business.