The Biden administration has just announced a major move in the trade war with China, slapping a 100% tariff on Chinese electric vehicles (EVs) among other goods.
This decision, set to take effect on September 27, is part of a broader strategy to protect strategic domestic industries from China’s state-driven excess production capacity, reports Reuters. The U.S. Trade Representative’s (USTR) determination, published on Friday, includes a range of tariffs on various goods, but the focus on EVs is particularly noteworthy.
Steep Tariffs Across the Board
The new tariffs aren’t just about EVs. They also include a 50% duty on solar cells and a 25% duty on steel, aluminum, EV batteries, and key minerals. These tariffs are designed to diversify the U.S. supply chain away from China, which currently dominates these sectors.
The USTR has also introduced a 50% duty on Chinese semiconductors, including polysilicon used in solar panels and silicon wafers, set to start in 2025.
Auto Industry Pleas Ignored
Despite pleas from the auto industry to lower tariffs on critical minerals needed for EV battery production, the USTR has kept the tariffs high. The tariff on lithium-ion batteries, minerals, and components will increase to 25% from zero, with the increase for EV batteries taking effect on September 27 and for other devices like laptops and cell phones on January 1, 2026.
Tough, Targeted Tariffs
Lael Brainard, the top White House economic adviser, told Reuters that these “tough, targeted” tariffs are necessary to counteract China’s state-driven subsidies and technology transfer policies. She emphasized that the 100% tariff on electric vehicles reflects the significant cost advantage that Chinese EVs have, which has allowed them to dominate car markets in other parts of the world.
Global Response and Political Implications
China has vowed retaliation against the “bullying” tariff hikes, arguing that its EV industry’s success is due to innovation, not government support. Meanwhile, the higher U.S. tariffs come at a time when Vice President Kamala Harris and former President Donald Trump are courting voters in auto and steel-producing states, positioning themselves as tough on China ahead of the November presidential election.
Temporary Relief for Some Sectors
The final tariff decision does provide some temporary relief for U.S. port operators and medical supplies. The duty on massive ship-to-shore cranes will allow exclusions for any Chinese port cranes ordered prior to the May 14 initial tariff announcements, as long as they are delivered by May 14, 2026. Additionally, tariffs on medical face masks and surgical gloves have been raised to 50%, but their start has been delayed to allow a shift to non-Chinese suppliers.
EVXL’s Take
This move by the Biden administration underscores the growing importance of the EV industry and the need to protect domestic production. As we see more countries like the European Union and Canada imposing similar tariffs on Chinese EVs, it’s clear that the global shift towards electric vehicles is accelerating. This is a crucial step in ensuring that the U.S. remains competitive in the EV market.
For more insights into the EV industry, check out our recent articles on China. We’d love to hear your thoughts on this article in the comments section below.