Tariff Hikes on Chinese EVs, Batteries, Chips, and More to Start Aug. 1, Biden Admin Says

The proposed changes are now undergoing a 30-day public comment period.

Electric cars for export waiting to be loaded on the "BYD Explorer NO.1," a domestically manufactured vessel intended to export Chinese automobiles, at Yantai Port, Shandong Province, China, on Jan. 10, 2024. STR/AFP via Getty Images

A range of Chinese imports, including computer chips and electric vehicles (EVs), will face a drastic increase in customs duties starting in August, the Office of the U.S. Trade Representative said on May 22.

The announcement comes a week after President Joe Biden ordered that the tariff rate on EVs imported from China be quadrupled from current levels of 25 percent to 100 percent as part of his administration’s effort to address China’s excess production of cheap EVs.

For lithium-ion EV batteries and battery parts, the tariff rate will increase from 7.5 percent to 25 percent in 2024, while duties on non-EV batteries will increase from 7.5 percent to 25 percent in 2026. China-made semiconductors are set to double from 25 percent to 50 percent next year.

Previously duty-free face masks and syringes imported from China will face new tariffs of up to 50 percent, and tariffs on medical and surgical gloves will increase from 7.5 percent to 25 percent in 2026.

In a notice posted to the Federal Register, the Trade Representative proposed that increases in 2024 be effective Aug. 1 and that increases in 2025 and 2026 be effective Jan. 1 of each year.

“Today, I am following through on my commitment to stand up to the People’s Republic of China’s unfair trade practices by issuing a formal proposal to modify the tariff actions,” Ambassador Katherine Tai said in a statement. “The president has directed me to make substantial tariff increases on targeted, strategic products, and this is an important step to carry out that vision.”

The proposed tariff hikes now enter a 30-day public commentary period. The federal trade agency stated that it wants public input on the effects of the proposed changes on the U.S. economy and on whether the proposed import duty on medical supplies should be set higher.

The public comment window will close on June 28.

The May 22 announcement escalates the intensifying EV battle that has caused concern on both sides of the aisle ahead of November’s presidential election.

China accounts for 60 percent of worldwide EV sales, according to the International Energy Agency. Chinese companies such as BYD, the country’s largest EV manufacturer, already sell vehicles worldwide across Asia, South America, and Europe. BYD and others would likely set up manufacturing in Mexico to pave their way into the United States, and some are already sounding the alarm on this.

Former President Donald Trump, who is heading toward a rematch with President Biden this November, pointed to efforts by Chinese automakers to assemble EVs in plants located in Mexico and sell them into the United States, a scenario he described as a “bloodbath” for the U.S. auto industry.

Such cars would be exempt from tariffs under the current terms of the US–Mexico–Canada trade agreement. President Trump pledged to address this issue by placing a 100 percent tariff on Chinese cars entering via the southern border.

“We’re gonna put a 100 percent tariff on every single car that comes across the line, and you’re not gonna be able to sell those guys, if I get elected!” the presumptive Republican nominee said at a rally outside Dayton, Ohio.

President Biden, who is committed to an ambitious goal of having 50 percent of all new vehicle sales in the United States be electric by 2030, has signaled that he won’t accept China’s dominance over the United States in the EV supply chain.

“China is now simply too large for the rest of the world to absorb this enormous capacity. Actions taken by the PRC [People’s Republic of China] today can shift world prices,” Treasury Secretary Janet Yellen said during a trip to Beijing earlier this year. “When the global market is flooded by artificially cheap Chinese products, the viability of American and other foreign firms is put into question.”

The Biden administration is also working to boost domestic EV and battery manufacturing. For example, the $7,500 tax credit for EV purchases applies only to vehicles made in the United States without Chinese components. President Biden’s signature Inflation Reduction Act also allocates billions of dollars to encourage EV sales and support battery and EV plants across the country, although it will take years before those facilities are running at full capacity.

Some lawmakers would go further to suggest that President Biden should outright ban all Chinese EVs. Among them was Sen. Sherrod Brown (D-Ohio), who argued that such a ban is needed to safeguard the U.S. auto industry from China’s “government-backed cheating.”

“Ohio knows all too well how China illegally subsidizes its companies, putting our workers out of jobs and undermining entire industries, from steel to solar manufacturing,” he wrote in a letter to President Biden. “The U.S. must ban Chinese electric vehicles now, and stop a flood of Chinese government-subsidized cars that threaten Ohio auto jobs, and our national and economic security.”