The Biden administration announced on Tuesday that it will impose a 100 percent tariff—quadrupling the current 25 percent—on electric vehicles (EVs) imported from China in 2024.
In addition to EVs, the White House has significantly increased tariffs on Chinese steel and aluminum products, lithium-ion batteries, and solar cells.
According to White House officials, the tariff hikes apply to about $18 billion worth of annual imports from China. They also said all existing tariffs levied during the Trump administration—about $300 billion of goods from China yearly—would stay if not increased.
“China’s using the same playbook it has before to power its own growth at the expense of others by continuing to invest despite excess Chinese capacity and flooding global markets with exports that are underpriced due to unfair practices,” Lael Brainard, director of the National Economic Council, told reporters at a call ahead of the announcement.
“China’s simply too big to play by its own rules.”
She added that the tariff increases are consistent with President Joe Biden’s China policy of “responsibly managing competition with China.” “We are working with our partners around the world to address our shared concerns about China’s unfair practices,” Ms. Brainard said.
Chinese EVs Are Cheap and in Excess
EVs have been a strategic priority for both the United States and China.For the White House, EVs are a centerpiece of its climate-related initiatives—achieving half of new car sales as EVs by 2030—and “Made in America” policy to boost the country’s auto manufacturing industry, a vital sector of the American economy.
After setting EVs as one of its priority industries a decade ago, the Chinese Communist Party (CCP) doubled down at its annual plenary meeting, which concluded in March, calling EVs one of the “new productive forces.” Instead of changing its economy from investment-led to consumption-led, Beijing seems to be poised to export its way out of its current economic slump.
Heavy subsidies have driven China’s EV industry into overcapacity. Their prices are cheap, too.
Driven by subsidies, China’s cheap EVs are also in excess.
Overcapacity Becomes the Core Issue
Nazak Nikakhtar, former assistant secretary for Industry and Analysis at the Department of Commerce during the Trump administration, said more would be needed to curb China’s overcapacity problem.“The dynamic with the Chinese EVs is that they’re not coming directly into the United States. They’re flooding global markets,” Ms. Nikakhtar told The Epoch Times.
“It’s the classic—China distorts all the other markets, and then they export their stuff into the United States in those import surges,” Ms. Nikakhtar said, adding that Washington needs to negotiate with Europeans, South Koreans, and Japanese to implement volume limits on their exports to the United States.
Other Tariff Increases
The Biden administration has levied new tariffs on Chinese port cranes and certain medical products. It will also triple tariffs on Chinese lithium-ion batteries, steel, and aluminum products to 25 percent this year and double the tariff on Chinese semiconductors to 50 percent by next year. The decision comes weeks after the White House called for tripling Chinese steel and aluminum tariffs.These tariffs, initially implemented by the Trump administration in 2020, are up for review after four years, according to the “phase one” trade agreement between the United States and China. These “Section 301 tariffs” were imposed according to Section 301 of the Trade Act of 1974, which authorized U.S. presidents to impose tariffs to counter international trade violations.
In a press call, a senior administration official said that upon review, the Office of the United States Trade Representative recommended no tariff reduction because “China has not eliminated many of the forced technology transfer policies and practices, and instead has even become more aggressive in some of those actions, including through cyber intrusions and cyber theft that harm American workers and businesses.”
Ms. Brainard at the National Economic Council highlighted the benefit of increased tariffs in two battleground states—Michigan and Pennsylvania—but a senior White House official said the decision had nothing to do with election-related considerations. According to White House senior officials on the press call, because the tariff decisions were a follow-up on the Section 301 review, the Biden administration has not considered an outright ban on Chinese EVs.
The officials assured that these tariff increases will not affect inflation as they are “a very targeted set of tariffs on specific sectors.”