US set to raise tariffs on Chinese electric vehicles next week

China says it will take steps to defend its rights and interests

Chinese electric vehicle start-up Nio Inc. vehicle is parked in front of the New York Stock Exchange (NYSE) to celebrate the company’s initial public offering (IPO) in New York, U.S., September 12, 2018.  REUTERS/Brendan McDermid
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US President Joe Biden is set to announce new China tariffs next week, including an increase in levies on electric vehicle imports, according to media reports.

The levy on Chinese EVs is set to quadruple, the Wall Street Journal reported.

US trade officials are expected to raise the tariff rate to roughly 100 per cent, according to the report.

An additional 2.5 per cent duty applies to all vehicles imported into the US.

The decision is the culmination of a review of Section 301 tariffs first put into place in 2018 under former president Donald Trump on roughly $300 billion in goods from China.

Mr Biden is expected to target sectors including EVs, semiconductors, batteries and solar cells with new levies while rejecting the across-the-board rises sought by Mr Trump.

The decision is a continuation of Mr Biden's call last month to increase tariffs on Chinese steel and aluminium. However, China currently exports little of either metal to the US.

Chinese EV manufacturer BYD recently overtook Tesla as the world’s number one producer, while China has already overtaken the US in terms of global unit sales.

The US has two major concerns. It claims authorities in Beijing are covertly subsidising Chinese EVs, with the goal of eliminating competition.

US and European Union leaders said this strategy has fuelled a deluge of cheap exports.

The EU also launched an EV subsidy investigation in October that may lead to additional tariffs.

The second claim is that Chinese electric cars have cameras and other data-gathering devices that will boost espionage efforts. The US contends that information on critical infrastructure and military deployments will be transmitted in real time to the Chinese EV manufacturers from their cars roaming the streets.

China’s Foreign Ministry said the tariffs imposed by the previous US administration “seriously disrupted” economic and trade exchanges between the two countries.

It called on Washington to cancel the restrictions and added that China will take steps to defend its rights and interests.

“Instead of correcting its wrong practices, the United States continued to politicise economic and trade issues,” Lin Jian, a ministry spokesman, said at a regular briefing on Friday. “To further increase tariffs is to add insult to injury.”

The US is standing up to China’s “unfair economic practices and industrial overcapacity”, Mr Biden said last month.

“I’m not looking for a fight with China. I’m looking for competition, but fair competition.”

Republican candidate Mr Trump has promised 60 per cent or higher tariffs on all Chinese goods.

He has said that the US auto industry would face a “bloodbath” if he loses in November, and has pledged to impose stiff tariffs on Chinese-made vehicles that are imported into the US.

Meanwhile Tesla chief executive Elon Musk said during the company’s earnings call in January that if there are no trade barriers established, Chinese EV makers will “pretty much demolish most other car companies in the world”.

Updated: May 11, 2024, 6:42 AM