The Rise of New Electric Vehicle Tariffs in the U.S. During the Biden-Rox and China Trade Warfare
Some of the items that the Biden administration sought to have made in America through investments include the Inflation Reduction Act, the CHIPS and Science Act and the Bipartisan Infrastructure Law.
During a trip to Beijing last month, the Treasury Secretary raised her concerns about “artificially cheap Chinese imports”, which she said other countries share. She said the new tariffs are necessary to protect American workers and companies from what could become a flood of unfairly traded products.
As Biden pushes to put in place three pieces of legislation that contain hundreds of billion of dollars in subsidies to bolster the domestic manufacturing and clean energy sectors, a presidential election will once again pose an issue of trade and jobs.
Lael Brainard, Biden’s top economic adviser, told reporters that China’s unfair practices had harmed communities in Michigan and Pennsylvania, and now had the chance to come back due to Biden’s investment agenda.
“One of the challenges is that once tariffs have been imposed, it is difficult politically to reduce them because affected industries tend to get used to them,” said Michael Froman, who was U.S. Trade Representative.
The White House tried to distinguish its approach from Trump’s. It points to comments made by Trump in rallies and interviews that he would broaden tariffs on all imported goods, including targeting Chinese cars, if he wins the election — something that they said would hike consumer prices.
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. Around 18 billion annual imports are expected to be affected by the increased tariffs.
The move, just the latest in a flurry of actions taken by the Biden administration against Chinese vehicles and their components, comes at a delicate time for the US electric vehicle industry, which lags behind China not only in vehicle price but quality.
Electric vehicle batteries and battery components will also be subject to new tariffs—Chinese lithium-ion battery tariffs rise from 7.5 percent to 25 percent, and rates for Chinese critical minerals, including manganese and cobalt, will move from 0 percent to 25 percent.
Solar manufacturers in the US urged the Biden administration to impose tariffs on solar panels from four countries in Southeast Asia earlier this year, after a Commerce Department investigation determined that Chinese companies were circumventing tariffs by moving goods through other countries.
Roughly 40 percent of China’s solar grade polysilicon manufacturing takes place in the Xinjiang region of China, and because of concerns about forced labor and human rights violations on the supply chain, the US blocks solar imports.
The US Auto Industry is Doomed to Walk a Line: How To Save the Nation from Climate Change? A Commentary on Helper’s Perspective
Meanwhile, the prospect of catastrophic global climate change hangs not only over the US auto industry, but the entire world. The US Energy Information Administration states that motor anddiesel fuel consumption in the transportation sector accounted for 34% of the country’s energy related carbon dioxide emissions last year.
But even with more time, the future will be complicated. Even as they pour money into electric vehicle and battery development, the auto suppliers will have to figure out how to stay afloat. The growth of US electric vehicle sales 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. But those efforts could take years.
Susan Helper, a professor of economics at Case Western Reserve University who worked on electric vehicle policy in the Biden administration, said that the administration is trying to walk a line. One goal is to create good jobs in a strong auto industry with clean production methods, and the other is to act quickly on climate change. In the long-term, they’re consistent with each other. There is conflict in the short term.