The Biden administration is anticipated to raise import tariffs on electric cars manufactured in China from 25% to 100%, reports the Wall Street Journal. Additionally, the US plans to tack on an extra 2.5% tariff, according to The Verge.
Concerns over the impact of inexpensive Chinese electric cars flooding the US market have prompted this move. The administration fears that such vehicles could undercut American auto manufacturers, leading to massive job losses. A prime example cited is the BYD Seagull, a compact SUV priced at under $10,000 in China. If introduced to the US market, it could pose a significant threat to the sales of larger SUVs and pickup trucks, staples of the American automotive landscape.
However, critics argue that policymakers may be overestimating the appeal of these Chinese-made vehicles to American consumers. Despite their affordability, they may not meet the expectations of US drivers in terms of features and performance.
Meanwhile, Volvo is gearing up to introduce its EX30 battery electric small SUV to the US market later this year. Manufactured in China by Geely, the EX30 should be subject to the current 27.5% tariff. However, US law allows for tariff refunds if a company also produces goods domestically for export, as is the case with Volvo. This loophole enables Volvo to effectively bypass the import tariff, contributing to its ability to offer the EX30 at a competitive starting price of under $35,000.
The Biden administration’s stance on Chinese-made electric cars has been consistent, with policies aimed at promoting domestic manufacturing and reducing reliance on foreign entities. The administration’s $7,500 EV tax credit incentivizes automakers to source batteries domestically or from approved trade partners, excluding Chinese manufacturers from eligibility. Additionally, concerns over security risks associated with Chinese smart car technology have prompted investigations.
Despite criticism from Republicans, including former President Donald Trump, Biden has maintained and expanded trade restrictions on China. The anticipated increase in tariffs on electric cars is expected to extend to other clean energy products, such as solar panels and critical minerals, as reported by the Wall Street Journal.
However, the US faces a dilemma in balancing its environmental goals with economic considerations. While tariffs on Chinese-made products aim to protect American industries, they could hinder the rapid adoption of affordable electric cars and renewable energy solutions necessary for combating climate change.