Biden expected to quadruple tariffs on Chinese electric vehicles: source

(WASHINGTON) – President Joe Biden is expected to quadruple tariffs on electric vehicles from China from about 25% to 100% in an announcement Tuesday, and increase other tariffs on key industries including semiconductors, solar and batteries, according to a source familiar with the decision.

The move has implications for the 2024 presidential election as Biden seeks to cement his image as tougher and smarter on China than former President Donald Trump. In key swing states, Biden has vowed to protect American workers from foreign competition and said in Pennsylvania last month that he would significantly increase steel tariffs on China.

The decision was made after a years-long review of the tariffs Trump imposed on about $300 billion of imports. Most of those Trump-era tariffs will remain in place.

By implementing a sharp increase in EV tariffs, the Biden administration aims to prevent a flood of Chinese-made cars from reaching the US market – a market in which China has not been a major player until now.

The level of the rates on the additional sectors was not yet clear on Monday.

Trump has said he would consider imposing tariffs of 60% or more on all Chinese imports and mocked Biden’s plan during his rally in New Jersey this weekend.

“He says he’s going to impose a 100% tariff on all Chinese electric vehicles. Isn’t that nice?” Trump said. “Biden should have done this four years ago.”

The Biden administration claims its approach is more targeted and strategic than Trump’s.

President Biden has focused his administration on improving domestic manufacturing and increasing investment in green energy. The tariffs reflect growing concerns that China’s overproduction of these types of goods could significantly harm its agenda — especially in an election year when both candidates are promising to be tough on China.

But some economists warn that rising rates will fuel tensions with China, raise costs for consumers and worsen inflation.

Ian Bbraker, the president and founder of Eurasia Group, a political risk research and advisory firm, said the higher tariffs on electric vehicles could complicate Biden’s climate agenda.

Bnemer said that “Chinese vehicles are much better at EVs than anyone else.”

“The interesting political point here is that Biden should be the pro-climate president,” Bremmer said. “But we do not support cutting emissions if it comes at the expense of American labor. And we don’t care if that means it’s less competitive and Americans will have access to more expensive, low-quality electric vehicles. That is the message they are sending.”

Tesla CEO Elon Musk said in his company’s earnings call earlier this year that Chinese car companies are the “most competitive car companies in the world.”

“Honestly, I think if trade barriers aren’t put in place, they will pretty much destroy most of the other auto companies in the world,” Musk added.

During her visit to China last month, Treasury Secretary Janet Yellen warned of increasing investments in “new” industries targeted by the People’s Republic of China’s industrial policy, including electric vehicles, lithium-ion batteries and solar energy.

“China is now simply too big for the rest of the world to absorb this enormous capacity. Actions taken by the People’s Republic of China today could shift global prices. And when the global market is flooded with artificially cheap Chinese products, the viability of American and other foreign companies is called into question,” Yellen said at a news conference in China.

“We’ve seen this story before. More than a decade ago, massive government support from the People’s Republic of China led to below-cost Chinese steel flooding the global market and decimating industries around the world and in the United States. “I have made it clear that President Biden and I will not accept that reality again,” she added.

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