- U.S. Government raises tariffs on Chinese electric vehicles from 25% to 100% to protect domestic production.
- Biden administration targets China’s market dominance and subsidies, citing national security concerns.
- EU investigates Chinese electric car dumping, considering tariffs due to state subsidies.
U.S. Government dramatically raises tariffs for imported EVs and emobility materials from China
The United States has sharply increased tariffs on EVs imported from China, raising them from 25% to 100%. This significant hike aims to counter what the U.S. government describes as “unfair trade practices.” The new tariffs also target batteries and other strategic products like semiconductors.
This move is part of the Biden administration’s broader strategy to bolster and protect domestic production and supply chains. Previous stimulus packages such as the Inflation Reduction Act, offered subsidies to attract green technology companies. This approach focuses on increasing the cost of key products manufactured in China.
Tariffs on EV batteries will rise from 7.5% to 25% this year.
Additionally, a new 25% duty on natural graphite and permanent magnets will take effect in 2024. These materials are crucial for EV production. The White House claims Chinese electric cars benefit from extensive subsidies and non-market practices. This, they argue, led to a 70% increase in China’s EV exports between 2022 and 2023, threatening investments in other countries.
Moreover, the U.S. government points to China’s dominance in the electric car battery supply chain. China controls over 80% of key segments, particularly in mining, processing, and refining critical minerals. This dominance, the administration argues, jeopardises national security and clean energy goals by making American supply chains vulnerable.
The tariff increase is part of a larger strategy including investment incentives, economic programs, tax credits, and legal requirements. The aim is to develop a robust domestic industrial base. However, this move risks sparking a new trade conflict with China.
Meanwhile, the European Union is taking a different approach.
The EU is investigating potential dumping of Chinese electric cars. This investigation, launched in October 2023, examines whether Chinese EV importers benefit from excessive state subsidies, distorting competition in Europe. The EU Commission has criticised Chinese manufacturers like BYD, SAIC, and Geely for not providing sufficient information during the investigation.
If the EU imposes punitive tariffs, they could apply retroactively from July. Analysts suggest that EU tariffs need to be as high as 50% to significantly impact Chinese manufacturers, who remain competitive even with a 30% tariff.
China has condemned these measures as protectionism, inconsistent with World Trade Organization rules. The Chinese Ministry of Commerce argues that such investigations disrupt global automotive industry supply chains and harm economic and trade relations.
