Chinese electric vehicles are creating growing concern among automakers and governments in Europe and the United States. In the U.S., the Biden administration is said to be on the verge of announcing new tariffs on Chinese products, and that could happen as early as this week.
Those tariffs will target EVs and related technologies, for instance semiconductors and solar equipment, as reported by Bloomberg.
Details about the figures related to those tariffs, as well as the categories of duties that will be imposed, remain vague for now. The U.S. administration is said to want to target areas of interest in the strategic sectors of competition and national security, one source said.
Electric vehicles are one important area. Manufacturers fear the unfair competition created by the large-scale introduction of BEVs offered at low prices because they are subsidized by the Chinese government. The vehicles could even benefit from U.S. government EV discounts. American automakers fear that such an eventuality could lead to plant closures in the United States, and even threaten their very survival.
The Office of the U.S. Trade Representative, an arm of the executive branch of the U.S. federal government, and part of the Executive Office of the President of the United States, made its recommendations several weeks ago, but the final announcement has been delayed as the details of the plan are debated internally, according to one of the sources and another person familiar with the matter.
Joe Biden, seeking re-election in November, wants to contrast his approach with that of Republican candidate Donald Trump, whose proposals for tariffs are more generalized and less focused on sectors that are most in need of protection. The White House fears that such an approach would trigger inflation.
In March of this year, Donald Trump promised a 100-percent tariff on potential Chinese electric vehicles built in Mexico and exported to the U.S. - if he is re-elected, of course.
Obviously, any announcement of new tariffs on Chinese products could invite China to retaliate. Recall that the tariffs imposed by Donald Trump during his administration prompted China to respond in kind.
The tensions between the two countries are very real, which is why this is a delicate issue.
Joe Biden has said he doesn’t want a trade war with China, while asserting that the two countries have entered a new era of competition, where the rules are changing. At the same time, the U.S. president recently announced an investigation into Chinese trade practices in the shipbuilding, marine and logistics sectors, a process that could lead to new tariffs.
The Biden administration has also put pressure on Mexico to prohibit China from indirectly selling its metal products to the U.S. from that country. For China, setting up an assembly plant in Mexico would allow it, under current rules, to sell its vehicles without the tariffs currently charged on vehicles assembled in China.
In short, the stakes are high for all concerned. China has stated that the tariff measures are counter-productive and harmful to the American and global economy.