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According to reports, the US government has announced additional tariffs on several categories of Chinese products, including various green products such as solar panels, batteries, and medical products, particularly increasing tariffs on Chinese-made EVs from 25% to 100%. It is reported that they are planning to announce.
Rumors that the tariffs would be extended were first reported late Thursday, following a multi-year review of Section 301 implemented under the previous administration.
And today, the Wall Street Journal reported that these tariffs will not only be extended, but expanded, with tariffs on Chinese-made EVs quadrupling from previous levels.
Currently, all vehicles manufactured in China are subject to a 25% tariff when imported into the United States, and all foreign-made vehicles are subject to an additional 2.5% tariff, for a total of 27.5%. These high tariffs had the effect of excluding Chinese-made cars from the US market, as they were easier to export to countries with lower tariffs.
However, given that Chinese EVs are incredibly affordable, even with a 25% tariff, prices could still be competitive. For this reason, it has been considered inevitable by most observers that Chinese EVs will eventually be sold in the United States.
Biden also appears to have decided that 25% tariffs would not be enough to stop tariff progress and instead decided to quadruple the tariffs to 100%. In other words, if imported into China, Chinese EVs would effectively be sold at twice the price. America. This has not yet been announced and the White House has declined to comment, but an announcement on new tariffs is expected on Tuesday.
Several U.S. (and European) companies are pushing for tariffs as China’s EV manufacturing has expanded rapidly in recent years.
China was originally a little slow in introducing EVs. His EV market share in 2015 was just 0.84%, similar to his US market share of 0.66% and well below his 3.1% share in California at the time. However, in 2023, the US market share rose to just 7.6% and California’s to just 21.4%, while China’s EV market share rose to a whopping 37%, surpassing several other major countries. (In 2020 it was only 5%). Therefore, the upward trend has been very rapid over the past three years). This caught foreign manufacturers by surprise, and the value of ICE cars in China plummeted as consumers showed no interest.
Even though China’s interest in EVs has increased significantly, EV manufacturing is increasing even more rapidly. So Chinese automakers have more than enough vehicles for the export market and are starting to export so many vehicles to Europe that they can’t find enough ships to carry them.
Although these EVs have not yet made their way to the U.S., most believe it is inevitable that they will arrive here soon. However, these increased tariffs make it a little less likely that U.S. consumers will be able to get their hands on these cheap, high-tech Chinese EVs.
This is not the first step Biden has taken to limit the ability of China’s auto industry to do business in the United States. The Anti-Inflation Act, which updated the U.S. EV tax credit, included protectionist measures that made EVs made in China ineligible for the tax credit. To qualify, EVs must be assembled in the United States, have a certain percentage of parts sourced from the United States or US free trade countries, and cannot include parts from “foreign companies of concern” (but , there are several ways to avoid this).
The net effect of this regulation is that batteries sourced from China will have a harder time qualifying for U.S. tax credits, making them less competitive in the U.S. market.
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