Biden’s New Tariffs on China Aim to Buy Time for EVs, but Success Uncertain

Biden Administration Imposes Tariffs on Chinese Electric Vehicles to Protect American Industry

The Biden administration has taken a significant step to safeguard the American electric vehicle (EV) industry by announcing a near-unprecedented tariff of 252% on Chinese EVs. This move aims to shield domestic manufacturers from unfairly priced Chinese imports, which previously faced a 25% tariff.

The Timing of the Tariffs

The decision to impose tariffs on Chinese EVs and their components comes at a critical juncture for the US auto industry, as it strives to catch up with China in terms of both vehicle price and quality. Chinese automaker BYD, which briefly surpassed Tesla as the world’s top EV seller last fall, has been producing electric vehicles since 2003.

The Race for Electric Vehicle Dominance

As the world grapples with the looming threat of catastrophic global climate change, nations are scrambling to not only manufacture more electric vehicles but also secure the batteries and supply chains necessary to power them. John Helveston, an assistant professor at George Washington University, emphasizes that the US is already behind in this race:

“The clock started 10 years ago, and we’re behind. We’re way behind. The tariffs will not insulate the US against competition from Chinese cars forever. They’re not going to make us better at making things.”

The Challenges Ahead for US Automakers

While US electric vehicle sales are on the rise, automakers and suppliers must navigate the challenges of staying afloat while investing heavily in EV and battery development. The Inflation Reduction Act aims to support domestic supply chains for EVs and renewable energy sources, but these efforts may take years to bear fruit.

Susan Helper, a professor of economics at Case Western Reserve University who worked on electric vehicle policy in the Biden administration, highlights the administration’s balancing act:

“The administration is trying to walk a line. One goal is a strong auto industry with good jobs and clean production methods, and the other is fast action on climate change. In the long-term, they’re consistent with each other. In the short term, there’s conflict.”

The Complexity of US Electric Vehicle Policy

The Biden administration’s recent decision to allow car buyers to receive up to $7,500 in tax credits on EVs containing Chinese-mined or processed graphite through 2026 highlights the complex nature of US electric vehicle policy. This policy reversal extends the deadline for automakers to eliminate Chinese graphite by two years, acknowledging the challenges faced by US automakers in meeting aggressive timelines.

The Global Impact of US Tariffs

It remains uncertain whether the tariffs will effectively protect US automakers’ business abroad, particularly in markets where Chinese EVs have already made significant inroads. China’s EV exports grew by 70% between 2022 and 2023, with the majority of these vehicles destined for the European Union and other European countries.

European automakers are divided on the issue of Chinese imports, with some warning that EU tariffs might backfire and others arguing for lower tariffs to encourage competition and innovation.

The Potential Impact on the US Car Market

Although China currently does not export many electric vehicles to the US, specific models like BYD’s electric Seagull sedan and Sea Lion SUV could attract EV-curious buyers with their competitive prices. However, any protection afforded by domestic tariffs on Chinese EVs will not aid US manufacturers in the global market, where they face stiff competition.

As the US navigates the complexities of the EV landscape, it remains to be seen how effective the tariffs will be in bolstering the domestic industry and accelerating the transition to a cleaner, more sustainable future.