US hikes tariffs on Chinese EVs to over 100%

By AP   May 15, 2024 | 12:07 am PT
US hikes tariffs on Chinese EVs to over 100%
US President Joe Biden speaks during a campaign event in Milwaukee, Wisconsin, on March 13, 2024. Photo by AFP
The U.S. has announced new tariffs on Chinese electric vehicles, which will increase to 102.5% this year, up from total levels of 27.5%, following a four-year trade review with China.

The review was undertaken under Section 301 of the Trade Act of 1974, which allows the government to retaliate against trade practices deemed unfair or in violation of global standards. For lithium-ion EV batteries, tariffs will rise from 7.5% to 25% this year.

President Joe Biden Tuesday said that Chinese government subsidies ensure the nation’s companies don’t have to turn a profit, giving them an unfair advantage in global trade.

"American workers can outwork and outcompete anyone as long as the competition is fair," Biden said in the White House Rose Garden. "But for too long, it hasn’t been fair."

The tariffs come in the middle of a heated campaign between Biden and Donald Trump, his Republican predecessor, to show who’s tougher on China.

Asked to respond to Trump’s comments that China was eating America’s lunch, Biden said of his rival, "He’s been feeding them a long time." The Democrat said Trump had failed to crack down on Chinese trade abuses as he had pledged he would do during his presidency.

Karoline Leavitt, the Trump campaign’s press secretary, called the new tariffs a "weak and futile attempt" to distract from Biden’s own support for EVs in the United States, which Trump says will lead to layoffs at auto factories.

The Chinese government was quick to push back against the tariffs, saying they "will seriously affect the atmosphere of bilateral cooperation." The foreign ministry used the word "bullying."

The tariffs are unlikely to have a broad inflationary impact in the short term because of how they’re structured, some not to take effect until 2026, but there could be price increases in the meantime for EV batteries, solar and some other specific items.

Biden administration officials said they think the tariffs won’t escalate tensions with China, yet they expect China will explore ways to respond to the new taxes on its products. It’s uncertain what the long-term impact on prices could be if the tariffs contribute to a wider trade dispute.

There are currently very few EVs from China in the U.S., but officials worry low-priced models made possible by Chinese government subsidies could soon start flooding the U.S. market. Chinese firms can sell EVs for as little as $12,000.

China’s commerce ministry said in a statement that the tariffs were "typical political manipulation" as it expressed its "strong dissatisfaction" and pledged to "take resolute measures to defend its rights and interests."

The Chinese EV maker BYD has explored the possibility of opening factories in Mexico for the Mexican market, possibly creating a way to ship goods into the United States. U.S. Trade Representative Katherine Tai said she was talking with industry and workers about the possibility and to "stay tuned."

The auto industry is still trying to assess the impact of the tariffs. But at present, it appears they could be assessed on only two Chinese-made vehicles, the Polestar 2 luxury EV and potentially Volvo’s S90 luxury gas-electric hybrid midsize sedan.

"We’re still reviewing the tariffs to understand exactly what’s affected and how," said Russell Datz, spokesman for Volvo, a Swedish brand now under China’s Geely group. A message was left seeking comment from Polestar, which also falls under Geely.

The Chinese foreign ministry spokesperson, Wang Wenbin, said the U.S. is trampling on the principles of a market economy and international economic and trade rules.

"It’s a naked act of bullying," Wang said.

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