NEWS

Biden Administration Confirms 100% Tariff on Chinese EVs For U.S. Interests

These Tariffs On Chinese EVs Will Come To Effect In 2024 With Some Batteries And Solar Cells Coming To Effect Either In 2024 or 2026

4 min read

By Michael Phoon • May 14, 2024

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It is now confirmed that the Biden administration has implemented quadrupling tariffs against Chinese imports, including Chinese electric vehicles (EVs) onto American soil. These tariffs also include batteries, solar cells, and other range of Chinese imports. 

Tariff Rates on Chinese EVs

The new tariffs were hiked from 25% to 100% and are set to come into effect in 2024, where this measure marks a departure from previous tariff levels focused on protecting American auto workers, American-made EVs, and the U.S. EV market. 

Moreover, the Biden administration expressed concerns over China’s EV exports soaring at a rapid pace against American interest in a press release stating, “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. A 100% tariff rate on EVs will protect American manufacturers from China’s unfair trade practices.”

Tariff Rates on Batteries

Furthermore, the Biden administration also raised tariffs against Chinese batteries that support EVs and solar cells that can be incorporated into EV technology. In terms of EV batteries, lithium-ion EV batteries will jump from 7.5% to 25% in 2024 and lithium-ion non-EV batteries will jump from 7.5% to 25% in 2026. As for the tariff rate on battery parts, that will also jump from 7.5% to 25% in 2024 according to the Biden administration. 

Also, the tariff rate on natural graphite and permanent magnets will jump to 25% in 2026 and other critical minerals will have the same tariff rate in 2024. With this in mind, the Biden administration voiced their reasons stating, “Concentration of critical minerals mining and refining capacity in China leaves our supply chains vulnerable and our national security and clean energy goals at risk. In order to improve U.S. and global resiliency in these supply chains, President Biden has invested across the U.S. battery supply chain to build a sufficient domestic industrial base.”

Tariff Rates on Solar Cells

Regarding solar cells, the Biden administration hiked the tariff rates for that from 25% to 50% in 2024. Specifically, these tariffs apply to both assembled or not assembled solar cells into modules. The Biden administration further notes that they have made massive investments in the U.S. solar sector while developing solar cell technologies that are associated with the Inflation Reduction Act that delivers supply-side tax incentives for solar components, tax credits, grant and loan programs to support this sector according to the Biden administration

Through these efforts from the Biden administration to support its solar cell sector, they also made further statements against Chinese solar cells stating, “China has used unfair practices to dominate upwards of 80 to 90% of certain parts of the global solar supply chain, and is trying to maintain that status quo. Chinese policies and nonmarket practices are flooding global markets with artificially cheap solar modules and panels, undermining investment in solar manufacturing outside of China.”

Protecting U.S. Interests Against Chinese EVs

The Biden administration has envisioned revitalizing American manufacturing and investing in the country’s economic future being centered on major sectors including EVs. With Chinese EVs getting more advanced and cheaper in price, the current U.S. EV market and automakers are unable to compete. These concerns were voiced notably by Tesla CEO Elon Musk, who stated earlier in the year referring to Chinese EVs saying, “they will pretty much demolish most other car companies in the world.”

In regards to U.S. and China relations, this will certainly raise the bar as the inaccessibility of Chinese EVs on American soil faces more obstacles that will make Chinese automakers reconsider setting foot there. While the immediate impact of these tariffs is yet to be seen, there will be rapid escalations in trade tension with upcoming discussions between the two yet to be unraveled as both parties monitor closely on the potential outcomes. Nevertheless, there will certainly be strong reactions from China as this impacts their future potential regarding EV growth in the global EV market. 

As the Biden administration moves forward with these new tariffs and plans to revitalize American manufacturing and develop further domestic EVs, Chinese EVs now have more challenges posed toward them as both parties navigate through this situation further in the global EV market along with their own interests at hand. 

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