Biden hits Chinese electric vehicles with 100% tariff

Worried that China is prepared to flood the U.S. market with underpriced electric vehicles, the Biden administration on Tuesday announced it would hike protective tariffs on those cars to 100% in an attempt to stop them beginning this year.

"We’re not going to let China flood our market, making it impossible for American automakers ... to compete fairly," President Joe Biden said in a speech in the Rose Garden at the White House to announce the tariff. "I’m determined that the future of the electric vehicles will be made in America by union workers. Period. And we’ll do it by following international trade laws."

Senior Biden administration officials told reporters on a call Monday that the tariff on Chinese EVs would be one of a series of tariffs on Chinese goods being hiked to protect American industries from cheap imports, including those on semiconductors, lithium batteries, solar cells, and steel and aluminum, as well as some other products.

The hike on Chinese EVs, from 25% of the cost currently to 100%, is by far the largest and comes as Biden, who is campaigning for reelection, moves to protect U.S.-based automakers, including the Detroit Three, and their investments in EVs. Many of those investments were sparked by federal funding and subsidies intended to spur EV technology and sales that were pushed by the Biden administration.

The tariffs, however, also could potentially spark a trade war with China. Last week, as the likelihood of the tariffs was reported by several media outlets, a spokesman for the Chinese Foreign Ministry criticized the move, telling the Wall Street Journal, “China will take all necessary measures to defend its rights and interests."

Biden said his "bottom line" is achieving "fair competition with China, not conflict." He accused the Chinese government of pouring funding into companies, allowing them to charge exceedingly low prices and then dumping products around the world, hurting domestic industries.

At the event at the White House, Biden noted the attendance of several Michigan Democrats, including U.S. Sen. Debbie Stabenow and U.S. Reps Debbie Dingell, of Ann Arbor, Haley Stevens, of Birmingham and Elissa Slotkin, of Holly. In a statement, Dingell praised the tariffs, saying, "We aren’t competing on a level playing field and we have seen the impact of unfair trade practices in the past. The Chinese Community Party's use of aggressive subsidies doesn't protect living wages, fair labor practices, occupational safety standards for workers, or environmental standards."

But some groups chastised the president for the tariffs. The Information Technology Industry Council, whose members include U.S. and international companies including Amazon, Apple, Microsoft and others, put out a statement saying the tariffs "will continue to strain Americans’ wallets, exacerbate the effects of global inflation by raising the price of goods and harm U.S. global leadership."

But many workers were pleased with the move, including members of the United Steelworkers who were on hand at the Rose Garden ceremony.

While tariffs are often criticized as creating inflationary pressures — and the Biden administration has been criticized for high inflation in the aftermath of the COVID-19 pandemic, though it has lessened somewhat in recent months —officials said they did not expect the tariffs to drive prices up generally for Americans.

Biden moves to strengthen tariffs initially put in place by Trump

The Biden administration announced the increased tariffs under Section 301 of the Trade Act of 1974, which allows the Office of the U.S. Trade Representative to take certain actions to prevent what it considers unfair trade practices. The administration had been reviewing the tariffs, which were implemented initially by former President Donald Trump, for some years.

Trump, who is running against Biden this fall in a rematch of the 2020 election, has advanced claims in Michigan and elsewhere that the administration's push to virtually mandate the sale of EVs could cost American autoworkers their jobs in the face of Chinese competition. But Biden administration officials said Tuesday that politics did not play into the decision to raise the tariffs.

In his remarks Tuesday, Biden said Trump failed in his stated goals to increase American exports and spur manufacturing during his term. With Trump in court in New York City facing a trial that examines whether he improperly moved business funds to pay off an adult film actress who claimed they had an affair before the 2016 election, Trump's campaign press secretary, Karoline Leavitt, issued a statement calling the tariffs "a weak and futile attempt to distract from the grievous harm his insane Electric Vehicle mandate is (having)."

Not all Republicans were as critical. U.S. Rep. John Moolenaar, R-Caledonia, who chairs the House committee investigating competition between the U.S. and China said the move was "both overdue and directly in line with bipartisan recommendations in the Select Committee’s economic policy report in December."

"We must act with urgency to further reduce dependence on the PRC (People's Republican of China) and prevent a surge in Chinese exports from decimating U.S. industry and workers and undermining our national security," Moolenaar said.

Lael Brainard, director of the National Economic Council, told reporters on Monday the EV tariffs were needed "to level the playing field for American automakers and autoworkers," including those in Michigan, given China's state investments in their own automakers' products, their control of much of the battery supply chain, the 40% tariffs they charge on U.S. vehicles imported into that country and a "massive surge of underpriced vehicles" in some other Western nations.

She said that, in turn, threatens more than $800 billion in investments in clean energy and technology, including the move to EVs, which, in turn, has been partially spurred by the Biden administration's programs to incentivize EV sales, battery development, and semiconductor and other advanced manufacturing that saw supply chains tighten during the worldwide COVID-19 pandemic. "The president won't let it happen here," she said.

On Monday, the Associated Press reported on an EV branded as the Seagull, made by Chinese manufacturer BYD, which, if sold in the U.S. under current tariffs, could cost about $12,000 — less than a third of the cost for the average American EV. The AP also said the Seagull "drives well and is put together with craftsmanship that rivals U.S.-made electric vehicles."

Meanwhile, a recent report by the Alliance for American Manufacturing, a trade group, noted Chinese incursions into Western markets with cheap products and efforts by Chinese manufacturers to build plants in Mexico to take advantage of trade agreements that allow imports into the U.S. from that country with lower barriers.

The report said Chinese government backing for its EV makers and control of supply chains could result in "an extinction-level event" for U.S. automakers if imports of inexpensive vehicles aren't controlled.

The administration announcement on Chinese products also moved to increase tariffs on that country's semiconductors from 25% to 50% next year. The tariff on lithium-ion EV batteries would rise from 7.5% to 25% beginning this year, as would the rate on battery parts, while that on lithium-ion batteries not used in EVs would rise by that same amount in two years. The rate on critical minerals needed for battery production would begin increasing, from zero in some cases, to 25% this year.

In terms of other products, the tariff rate on Chinese solar cells would increase from 25% to 50% this year; on certain medical products from as little as zero to 25% this year; and on certain steel and aluminum products from between zero and 7.5% to 25% this year.

Contact Todd Spangler: [email protected]. Follow him on Twitter@tsspangler.

This article originally appeared on Detroit Free Press: Biden hits Chinese electric vehicles with 100% tariff