Joe Biden to Possibly Quadruple Tariffs on Chinese EVs, Raising Duties to 100%

The US government plans to impose higher tariffs on various Chinese imports, including green products such as solar panels and batteries, medical equipment, and, most notably, an increase in duties on Chinese EVs from 25% to 100%.

The speculations originally surfaced late Thursday that tariffs will be prolonged following a multi-year review of "section 301 tariffs" issued by the previous administration.

Wall Street Journal Reports Quadrupled Duties on Chinese EVs as Biden Administration Considers Tariff Doubling

On May 10, the Wall Street Journal reported that these duties would be increased, with levies on Chinese-made EVs quadrupling from previous levels.

Currently, all Chinese-made automobiles are subject to a 25% duty when imported into the United States, on top of an additional 2.5% levy on all foreign-made cars, for a total of 27.5%. This high tax has effectively excluded Chinese automobiles from the US market, as it is easier to export to nations with lower tariffs first.

However, because Chinese EVs are quite low, even a 25% tax may result in competitive prices. As a result, most experts believe that Chinese EVs will soon be sold in the United States.

Biden appears to have also concluded that the 25% tariff would not be sufficient to halt the advance and has instead opted to double it to 100%, implying that Chinese EVs will sell for double the price they would otherwise be imported into the US. While this has not yet been confirmed, and the White House has declined to comment, an announcement on the new tariffs is due on Tuesday.

Numerous entities in the United States (and Europe) have proposed tariffs on Chinese EV production, which has increased rapidly in recent years.

Rapid Rise of Chinese EV Market Challenges Western Manufacturers and US Trade Policies

China was initially slow to adopt EVs; in 2015, the EV market share was only 84%, comparable to the US market share of 66% and far below California's 3.1%, as per Electrek.

However, by 2023, the US market share had climbed to a dismal 7.6% and California to only 21.4%. China's EV market share had risen to a stunning 37%, leapfrogging numerous other top countries. This caught Western manufacturers off guard, sending ICE car values plunging in China because consumers were simply uninterested.

Despite the tremendous surge in Chinese EV enthusiasm, EV manufacturing has grown even faster. This has left Chinese automakers with an abundance of vehicles for the export market, and they have begun sending so many to Europe that there aren't enough ships to transport them.

These EVs have yet to arrive in the United States, but most believe they will do so shortly. However, increasing tariffs make US buyers less likely to have access to these low-cost, high-tech Chinese EVs.

This is not Biden's first endeavor to limit the Chinese auto industry's capacity to operate in the United States. The Inflation Reduction Act, which revised the US EV tax credit, included protectionist provisions that prevented Chinese-sourced EVs from using the benefit. To be eligible, EVs must be constructed in the United States and have a specified percentage of components supplied in the United States or US free trade countries, with no parts from "foreign entities of concern" (though there are several exceptions).

The law has the net effect of making it more difficult for Chinese batteries to obtain tax credits in the United States, lowering their competitiveness in the market.

Photo: Gage Skidmore from Peoria, AZ, United States of America, CC BY-SA 2.0, via Wikimedia Commons