The Biden Administration and the U.S. Electric Vehicle Industry: Why China is Facing? The Implications of the Taxes and Substituations
Taxes were imposed by former President Donald Trump on imports from China and other countries. The Biden administration decided to keep all of the tariffs and even increase a few of them, such as solar cells, computer chips, steel and aluminum.
The White House says strategic hikes and massive subsidies passed by congress can help build a U.S. based green energy supply chain.
“Until China changes its practices, these tariffs are also meant to give our industries a break, a respite, to be able to breathe,” U.S. Trade Representative Katherine Tai told NPR.
The move comes at a delicate time for the US electric vehicle industry, which is being left behind by China in vehicle prices and quality.
Chinese electric vehicles from makers like BYD aren’t just cheap — they’re also good. Sue Helper is a former Biden official who recently took the BYD Seagull for a test ride.
There’s bipartisan concern that if those cars were sold in the U.S. at such cheap prices — “unfairly underpriced,” as White House economist Lael Brainard put it — they would undercut U.S.-made vehicles and result in catastrophic job losses at American factories.
Susan Helper is a professor of economics at Case Western Reserve University and worked in the Biden administration on electric vehicle policy. One goal of a strong auto industry is for it to have good jobs and clean production methods, with the other being fast action on climate change. They are consistent for the long-term. There is conflict in the short term.
The tariffs are also meant to start the clock on the US’s own domestic electric vehicle development, which will need more and cheaper electric cars, but also the batteries and battery supply chains to make them go.
In the past, Democrats and Republicans supported free trade, saying it was important for prosperity and that the government should support specific industries. There is bipartisan support for tariffs. Subsidies for certain types of manufacturing are more commonly (and approvingly) called industrial policy.
Biden’s policy toward China is a different thing than Trump’s. Both the candidate and the other point out that there are differences.
The Biden administration sought to invest in America through investments in the Inflation Reduction Act, the CHIPS and Science Act, and the Bipartisan Infrastructure Law, which are covered in most of the new tariffs.
“We know China’s unfair practices have harmed communities in Michigan and Pennsylvania and around the country that are now having the opportunity to come back due to President Biden’s investment agenda,” Lael Brainard, Biden’s top economic adviser, told reporters.
“One of the challenges is once tariffs have been imposed, it is quite difficult politically to reduce them — because the affected industry tends to get used to them, like them, operate with them as baked into their plans,” said Michael Froman, who was U.S. Trade Representative during the Obama administration.
The White House has downplayed the risk that the new tariffs could spark retaliation from China, saying that the issues have been discussed during meetings of top U.S. and Chinese officials, and were unlikely to come as a surprise.
It’s the latest move the US has taken amid efforts to ramp up domestic manufacturing while escalating trade tensions with China. Increased tariffs are expected to affect $18 billion in annual imports.
The US EV industry is affected by the higher tariffs on batteries, semiconductors, and critical minerals. This year’s tariffs on the battery parts and Li-ION batteries will increase to 25 percent. A similar increase for non-EV lithium batteries will go into effect in 2026. The tariffs on Chinese semiconductors will double to 50 percent.
The Biden administration was urged by solar manufacturers in the US to slap tariffs on solar panels from Southeast Asia, after a Commerce Department investigation showed that Chinese companies were skirting tariffs by moving goods through other countries.
The US already blocks solar imports from China’s Xinjiang region, where roughly 40 percent of solar-grade polysilicon manufacturing takes place, over concerns about forced labor and human rights violations along the supply chain.
The Future of the US Auto Industry: Challenges for Electric Vehicles and Other Renewable Energies, and Implications for the Inflationary Reform Agenda
The US auto industry’s existence is in danger of being negatively impacted by catastrophic global climate change. Motor and diesel fuel consumption in the US transportation sector accounted for nearly a third of the country’s energy-related carbon dioxide emissions last year, according to the US Energy Information Administration.
But even with more time, the future will be complicated. Even as they pour billions of dollars into the development of electric vehicle and battery technology, automakers and suppliers will have to figure out how to stay afloat. The growth of electric vehicle sales in the US has slowed.
Meanwhile, another influential US policy, the Inflation Reduction Act, directs billions to building up domestic supply chains for electric vehicles and other renewable energy sources. Efforts could take a long time.