Today, the Biden administration announced a nearly unprecedented measure 100 percent rate on electric vehicles made in China, a measure that the White House said would protect the American industry from “unfairly priced Chinese imports.” Previously, tariffs on Chinese electric vehicles were 25 percent.
Electric vehicle batteries and their components will also be subject to new tariffs: Chinese tariffs on lithium-ion batteries will rise from 7.5 percent to 25 percent, and rates on critical Chinese minerals including manganese and cobalt, will go from 0 percent to 25 percent.
The move, just the latest in a series 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 the price but also in the quality of the vehicles.
China’s leadership in the electricity sector, experts say, is due to years of investment in vehicle software, batteries and, crucially, supply chain development. BYD, which briefly overtook Tesla as the world’s top electric vehicle seller last fall, has been making electric vehicles since 2003.
Meanwhile, the prospect of catastrophic global climate change looms not only over the American auto industry, but over the entire world. Motor fuel and diesel consumption in the U.S. transportation sector accounted for nearly a third of the country’s energy-related carbon dioxide emissions last year, according to the U.S. Energy Information Administration.
The tariffs reflect the unfortunate situation of the US government: it hopes to accelerate sustainable energy sources while reducing imports from a country that produces sustainable energy sources very well.
The tariffs are also intended to kickstart domestic development of electric vehicles in the United States, which will need more and cheaper electric cars, but also batteries and battery supply chains to power them.
Or maybe not start it. “The clock started 10 years ago and we are behind. We’re way behind,” says John Helveston, assistant professor of engineering management and systems engineering at George Washington University, who studies electric vehicle development and policy. The tariffs, he says, will not forever insulate the United States from competition from Chinese cars. “They won’t make us better at making things.”
Will the effort work? In a written statement, John Bozzella, president and CEO of America’s leading auto lobby group, the Alliance for Automotive Innovation, was optimistic: “American automakers can compete and innovate more than anyone else in the transition to electric vehicles,” he said. “There’s no doubt about that. The issue right now is not will… the issue is time.”
But even with more time, the future will be complicated. Automakers and auto suppliers selling in the United States will have to figure out how to stay afloat even as they continue to invest billions in the development of electric vehicles and batteries. And while electric vehicle sales in the United States are increasing, their growth has slowed.
Meanwhile, another influential American politician, the Inflation Reduction Law, spends billions to build domestic supply chains for electric vehicles and other renewable energy sources. But those efforts could take years.
“The administration is trying to toe a line,” says Susan Helper, an economics professor at Case Western Reserve University who worked on electric vehicle policy in the Biden administration. “One goal is a strong auto industry with good jobs and clean production methods, and the other is rapid action on climate change. In the long term, they are consistent with each other. In the short term, there is conflict.”
