US plans to impose major new tariffs on EVs, other Chinese green energy imports, AP sources say

WASHINGTON — The Biden administration plans to impose major new tariffs on electric vehicles, semiconductors, solar equipment and medical supplies imported from China, according to a U.S. official and another person familiar with the plan.

In particular, rates for electric vehicles could quadruple – from the existing 25% to 100%. The plan was described by the people on condition of anonymity because they were not authorized to provide details ahead of a formal announcement.

The tariffs, expected to be announced Tuesday, come as officials within the Democratic administration expressed frustration over Chinese “overcapacity” of electric vehicles and other products that they say threaten U.S. jobs and national security.

Industrialized countries, including the United States and its European allies, fear that a wave of low-priced Chinese exports will overwhelm domestic production. On the U.S. side, there are particular concerns that China’s green energy products will undermine the massive climate-friendly investments made through the Democrats’ Inflation Reduction Act, which President Joe Biden signed into law in August 2022.

The additional tariffs also carry some political weight ahead of November’s presidential elections. Both Biden and his presumptive Republican challenger, former President Donald Trump, have told voters they will be tough on China, the world’s second-largest economy after the United States and a rising geopolitical rival.

Biden has defined his policy as “competition with China, not conflict.” He has embraced an industrial strategy that has used government financial support to lure private investment in new factories and advanced technology, while limiting sales of computer chips and other equipment to China.

Trump has floated the idea of ​​imposing massive tariffs on China to reduce the US trade deficit with that country. He has repeatedly claimed that Biden’s support for electric cars would ultimately shift American factory jobs to China.

Tuesday’s announcement is expected to maintain a number of tariffs imposed during the Trump administration on about $360 billion of Chinese goods. The new import tax would add products such as Chinese syringes and solar equipment.

There is a risk that tariffs could lead to a broader trade conflict between the two countries as they react to each other’s moves. China is trying to create a technological advantage and move up the economic chain.

There are some indications that China is phasing out production of lithium-ion batteries used in electric vehicles, mobile phones and other consumer electronics, at a time when the country is facing increasing criticism from the West.

On Wednesday, China’s Ministry of Industry and Information Technology issued a draft rule aimed at “strengthening the management of the lithium-ion battery industry and promoting the high-quality growth of the sector.”

The draft, which has been posted on the ministry’s website for public input, says companies should strive for better technological innovation, higher quality and lower costs, rather than expanding existing capacity.

Lithium battery factories built on restricted agricultural lands or industrial zones should be closed, the draft said.

U.S. Trade Representative Katherine Tai is conducting a review of Trump-era tariffs, and Republican lawmakers, including House Ways and Means Committee Chairman Jason Smith and Trade Subcommittee Chairman Adrian Smith, are pushing for a “ rapid completion” of the investigation.

“Continued inaction on the four-year review poses serious risks to American farmers, manufacturers, innovators, small businesses and workers,” they wrote in a letter to Tai this week.

Meanwhile, Democratic Senator Sherrod Brown of Ohio said in a tweet on Friday that “tariffs are not enough. We need to keep Chinese electric vehicles out of the US. Period of time.”

The Biden administration has also said it will investigate Chinese-made “smart cars” that could collect sensitive information about the Americans who drive them. The Commerce Department announced in February a proposed rulemaking that would launch an investigation into national security risks posed by “connected vehicles” from China and other countries considered hostile to the United States.

Treasury Secretary Janet Yellen, who traveled to Guangzhou and Beijing in early April, cited the production of electric vehicles and their batteries, as well as solar energy equipment – sectors that the US government is trying to promote domestically – as areas where Chinese government subsidies have led to rapid expansion of production.

“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 change world prices,” she said during a speech in Beijing in April, using the abbreviation for China’s official name, the People’s Republic of China.

“And when the global market is flooded with artificially cheap Chinese products, the viability of American and other foreign companies is called into question.”

The plan for new tariffs was previously reported by Bloomberg News and The Wall Street Journal.