What?
The US government is rumored to announce a significant increase in tariffs on Chinese electric vehicles (EVs) from 25% to a whopping 100%. This move is part of a wider tariff extension on various Chinese goods, green products, medical supplies, and particularly EVs. The decision follows a multi-year review of tariffs implemented in the previous administration’s “section 301 tariffs.”
Why does it matter?
Currently, Chinese-made cars face a 25% tariff when imported into the US, making it challenging for them to compete in the market. However, due to the affordability of Chinese EVs, even a 25% tariff might not deter their competitiveness. With the quadrupling of tariffs to 100%, it would effectively double the prices of Chinese EVs in the US market, potentially limiting consumer access to these affordable, high-tech vehicles.
The increase in tariffs aligns with efforts to protect the US auto industry and minimize the impact of Chinese imports. The Biden administration has previously taken steps to limit Chinese EVs’ access to US tax credits by enforcing protectionist measures that require EVs to be assembled in America with a significant percentage of components sourced domestically.
How is it going to shape the future?
The rise of Chinese EV manufacturing has outpaced predictions, with China leading the EV market share globally. While Chinese EVs haven’t flooded the US market yet, the escalating tariffs could delay or reduce consumer access to these vehicles. This move adds to the ongoing trade tensions between the US and China, particularly in the automotive sector.
With these new tariffs in place, the competitiveness of Chinese EVs in the US market may diminish, impacting the growth of the Chinese auto industry abroad. As the global EV market continues to evolve rapidly, the decision to increase tariffs underscores the US government’s efforts to protect domestic industries and regulate international trade practices.