Chinese electric cars imported to the US will now pay their worth in tariffs on arrival – and experts fear the new charges may have a larger effect on vehicles sold by all manufacturers.
The US Government has tripled its tariff on Chinese-made electric cars – from 25 to 100 per cent – in a move alleged to be in reaction to "unfair trade practices" and "artificially low-priced" exports.
It will mean auto producers will now pay the value of the Chinese-made electric vehicle landing on US borders to the government in taxes, once the 100 per cent tariff comes into place later this year.
The first effect on US new-car purchasers will not be large, given there are just a few of Chinese-built electric vehicles marketed in the US — thanks in part to the prior tax of 25 per cent, which remains in place for petrol-powered automobiles from China.
However, analysts have cautioned the Biden Administration's increased tariffs on other Chinese-produced commodities – including computer chips and electric-car battery components – might damage automobiles built outside of China.
US tariffs on lithium-ion batteries manufactured in China for electric vehicles will jump from 7.5 to 25 per cent in 2024, with Chinese lithium-ion batteries for all other purposes to follow in 2026.
The same 25 per cent fee will be imposed to crucial elements used in electric-car batteries and motors — natural graphite and permanent magnets from 2026, and "certain other critical minerals" this year – none of which presently carry a tariff.
While they are intended at Chinese companies, the new levies will hurt US auto producers – and electric vehicles (EVs) they construct in North America.
The Ford Mustang Mach-E electric SUV developed in Mexico employs batteries from Chinese firm CATL — as do a handful of Tesla vehicles made in California.
The US Government would also impose a 50 per cent duty on semiconductors - the computer chips used en masse to power the electronics in contemporary automobiles – up from 25 per cent today, as well as solar cells, and a 25 per cent tax on "certain" Chinese steel and aluminium items.
"With extensive subsidies and non-market practices leading to substantial risks of overcapacity, China’s exports of EVs grew by 70 per cent from 2022 to 2023 – jeopardizing productive investments elsewhere," the White House stated in a media statement.
"A 100 per cent tariff rate on EVs will protect American manufacturers from China’s unfair trade practices."
It claimed the taxes on materials are meant to "improve US and global resiliency" in supply chains that make electric-car batteries, portions of which China is estimated to control 80 per cent, according to the US government.
To contrast the Chinese tariffs, the US Government in recent years has implanted new subsidies of up to $US7500 ($AU11,350) for electric cars with battery components and essential minerals made outside of "countries of concern", which include China.
Only four mass-produced electric vehicles for sale in the US are created in China, all constructed by Chinese automobile manufacturer Geely: the Volvo EX30, Polestar 2, Polestar 4 and Lotus Eletre.
Until recently, Volvo has been able to circumvent the current 25 per cent duty on Chinese-made vehicles in the US for the EX30 – and sell it for under $US34,950 ($AU53,000) – since it is permitted to use Polestar 3 and Volvo EX90 SUVs it exports from the US to balance the books.
It is uncertain whether it would be able to preserve this agreement under the 100 per cent import duty, or will suffer a hefty price hike for the EX30.
"For too long, China’s government has used unfair, non-market practices," the government stated in a media statement.
China’s forced technology transfers and intellectual property theft have led to its control of 70, 80, and even 90 per cent of global production for the vital inputs required for our technologies, infrastructure, energy, and health care," it claimed.
"Furthermore, these same non-market policies and practices contribute to China’s growing overcapacity and export surges that threaten to significantly harm American workers, businesses, and communities."
The European Union is also mulling taxes on Chinese-made electric cars, alleging the Chinese government is unjustly subsidising the export of automobiles to keep their retail costs low in Europe.
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