Biden Administration to Quadruple Tariffs on Chinese Electric Vehicles

The Biden administration is set to announce a significant increase in tariffs on Chinese electric vehicles, semiconductors, and medical supplies. The new tariffs, expected to be announced this week, will target industries deemed strategic and nationally important.

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Bijay Laxmi
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Biden Administration to Quadruple Tariffs on Chinese Electric Vehicles

Biden Administration to Quadruple Tariffs on Chinese Electric Vehicles

The Biden administration is set to announce a significant increase in tariffs on Chinese electric vehicles (EVs) this week, extending Trump-era policies aimed at boosting domestic manufacturing. The tariffs are expected to roughly quadruple, marking a major escalation in the ongoing trade tensions between the United States and China.

Why this matters: This move has significant implications for the global trade landscape, as it may spark retaliatory measures from China and further strain relations between the two economic superpowers. The tariffs could also have a ripple effect on the clean energy industry, influencing the pace ofelectric vehicle adoption and the development of sustainable technologies.

The new tariffs, which could be announced as early as Tuesday, will target not only EVs but also semiconductors, solar equipment, and Chinese-made medical supplies like syringes and personal protective equipment. The measures are part of the revised "Section 301 tariffs" launched in 2022 to review the Trump-era policy.

The Biden administration has zeroed in on industries that it says are of strategic competitive and national security importance. The decision aligns with the administration's efforts to support domestic production of clean energy products and semiconductors, as seen in the passage of the Inflation Reduction Act and the CHIPS Act.

Senate Banking Committee Chairman Sherrod Brown has called for an outright ban on Chinese EVs, citing concerns over personal data risks. "We are accelerating efforts to produce more vehicles outside China," said Thomas Ingenlath, CEO of Polestar, a Swedish-Chinese EV maker that plans to start production in South Carolina for US and European markets from 2024.

However, the impact of the new tariffs on Chinese industries is expected to be limited. Very few Chinese EVs are currently exported to the US, with Geely being the only Chinese automaker to export to the US in the first quarter of 2023, shipping just 2,217 cars. The US solar panel market is also small for China, with exports to the US subject to tariffs for over a decade.

The tariff review stems from a 2018-2019 action by former President Donald Trump, who imposed tariffs on over $300 billion worth of Chinese goods under Section 301 of the 1974 Trade Act. The review, led by U.S. Trade Representative Katherine Tai, has determined that the tariffs are still necessary, with no cuts expected.

The Biden administration's move is seen as taking a tough stance on China ahead of the November 2024 presidential election. The measures could invite retaliation from China, further heightening tensions between the world's two largest economies at a time when their relationship is already strained.

Key Takeaways

  • Biden administration to quadruple tariffs on Chinese electric vehicles (EVs) this week.
  • Tariffs to target EVs, semiconductors, solar equipment, and Chinese-made medical supplies.
  • Move aims to boost domestic manufacturing and support clean energy industry.
  • Impact on Chinese industries expected to be limited due to low export numbers.
  • Tariffs may spark retaliatory measures from China, straining US-China relations.