U.S. Quadruples Tariffs to 100% on Imported Chinese Electric Vehicles

The decision was announced yesterday just as puppet Joe Biden was preparing a meeting with labor unions covering auto manufacturing and the other industries affected by the new tariffs.

Directed at a relatively small $18 billion worth of goods covered by the new import levies, the executive order was a highly political move intended to retain the votes of the union members at a time when the economy is slowing. It also comes at a time when some of the industries Biden has touted as the wave of the future of green technology, such as the electric vehicle market, are already lagging in sales while China is rapidly taking market share outside of the U.S.

Biden and his economic advisors blame the loss of these international markets and the threats to the U.S. economy as happening because China is actively subsidizing many of the goods which are most important to green economy.

“When you make tactics like this, you’re not competing, it’s not competition, it’s cheating. And we’ve seen damage here in America,” Biden told the union members.

“The Chinese government has poured state money into Chinese companies,” Biden continued. “China heavily subsidized all these products, pushing Chinese companies to produce far more than the world can absorb and then dumping excess products on the market at unfairly low prices.”

The White House team which recommended the tariffs said the new fees came after a three-year review of “unfair trade practices” the Chinese had been using for years against the U.S. Besides the charges that China is subsidizing many businesses, the investigation studied the continuous waves of industrial espionage on American companies by Chinese operatives based in the U.S., the requirement that American companies wishing to manufacture in China must transfer some technology as part of the deal, extensive violations of U.S. intellectual property rights, and export dumping.

White House Economic Council Director Lael Brainard laid out the rationale for Biden’s latest tariff action in a brief statement accompanying Biden’s speech at the Rose Garden yesterday.

“China is using the same playbook it has before to power its own growth at the expense of others by continuing to invest despite excess Chinese capacity and [by] flooding global markets with exports that are underpriced due to unfair practices,” Brainard said. “China’s simply too big to play by its own rules.”

Now the U.S. is drawing on its own playbook to fight back, via a mix of substantially raised tariffs on some goods and new ones on others. These include:

Electric Vehicles. The tariff rate on EVs imported from China will increase from its current rate of 25% to 100%. This new tariff goes into effect this year.

The White House briefing materials note that China’s global EV exports, most of which were to areas outside the United States, grew by 70% from 2022 to 2023. China is also currently the largest EV and EV battery maker in the world.

The challenge with this levy is that even now, despite ongoing tax and direct credits for the purchase of EVs and EV batteries made in the U.S., the American market for these vehicles was not doing well long before any concerns about Chinese EVs entering the U.S. After years of promotion of EVs which rely solely on their batteries to power them, American consumers are increasingly put off by poor quality control standards by companies such as Tesla, sticker prices which are much higher than equivalent gas-powered cars, challenges involving vehicle driving range on a single charge, availability of charging stations along the road, poor performance in cold weather, and some difficult discoveries about the much higher cost of ownership of EVs than many imagined some years ago.

Lithium-Ion Batteries for Electric Vehicles and Other Uses. The tariff on lithium-ion EV batteries will more than triple this year, from 7.5% to 25%. A similar jump in tariffs will go into effect on all non-EV lithium-ion batteries imported from China in 2026.

Solar Cells. Solar cells imported from China, regardless of whether sold as modules or as complete subassemblies, will see tariffs rise from 25% to 50% this year.

Semiconductor chips. The tariffs on semiconductors imported from China will increase from 25% to 50% starting in 2025.

Magnets and Rare Earth Minerals. New tariffs of 25% will be imposed on critical rare earth minerals from China starting this year. Natural graphite and permanent magnets imported from China will also for the first time see tariffs of 25% beginning in 2026. Both categories of goods currently pass into the U.S. without any import levies.

Steel and Aluminum. Chinese steel and aluminum have long been a target of U.S. and European tariffs as a subsidized commodity which when imported causes serious harm to domestic production of the same materials. It is also an area which the White House have invested $6 billion into to increase domestic capacity and shift over to “greener” production methods where possible. Under the new tariffs, certain steel and aluminum materials imported to the U.S. will see tariffs raised this year from their current numbers of 0 to 7.5% now to 25%.

Medical Products. Basic commodity medical items have increasingly been imported from China and threatening domestic production sources. To protect against the situation growing even worse, new tariffs of 50% will be imposed on syringes and needles made in the PRC starting this year. Other Chinese-made medical supplies which will see new import fees include certain respirators and face masks, with levies going up from the current 0 to 7.5% value to 25% 2024 as well. In 2026, rubber medical and surgical gloves made in China will be charged with duties rising from the 7.5% rate imposed now to 25%.

Ship-to-Shore Cranes. These cranes, which have become a key part of the importing logistics tool set at all major American ports, will now be charged tariffs of 25% this year if they were made in the People’s Republic of China.

On the U.S. side of this argument, CEO Elon Musk of Tesla, a company once praised for its innovation and now struggling in a morass of manufacturing defects, lawsuits regarding its autopilot software, and prices far too high for the average American to afford, should be pleased by the new 100% tariffs on Chinese EVs. Earlier this year he made the statement that without the tariffs China’s cheap EVs, some which sell for less than U.S. $15,000 and which are also being set up for manufacturing in Mexico to be shipped under the USMCA free trade agreement into the U.S., would “demolish” the global EV competitive market unless new tariffs were applied in most major international markets.

The Chinese Foreign Ministry quickly attacked these new tariffs. They argued that the Biden administration had grossly “hyped up the so-called ‘overcapacity’ in China’s new energy sector”, and by doing so would simply damage the strong momentum Biden had already put in place to emphasize greener products and address the root causes of climate change.

Despite the tough talk from Beijing, Chinese economic analysts say the PRC needs to be wary of what could happen if as expected the European Union and other major trade sectors implement tariffs similar to those puppet Biden just put in place.

“China has recently been criticized by some of its major trade partners for running at ‘overcapacity’, dumping cheap products and deepening its trade relations with Russia,” said Nomura’s Chief Economist Lu Ting from the investment group’s Hong Kong office in response to the latest import levies for products heading to the U.S. “Rising trade tensions may impede the export sector and encourage more supply chain relocation away from China in the longer run.”