Biden Announces Tariff Increase
Electric cars manufactured for export by BYD wait to be loaded onto a ship at a port in Yantai, China, on April 18.AFP via Getty Images
U.S. President Joe Biden announced a major expansion of tariffs on Chinese electric vehicles on Tuesday—quadrupling them to 100 percent—as well as raising tariffs on other sectors, such as steel, aluminum, and solar. Under Biden, the White House has largely kept the tariffs on Chinese goods that it inherited from the Trump administration, even amid a long-running review of the program. However, this is the first large tariff increase initiated by Biden.
The United States currently imports few Chinese electric vehicles, or EVs, but the auto industry sees them as a potentially major threat. The Chinese EV industry has boomed since the mid-2010s and grown exponentially since 2019, thanks to strong government subsidies and a thriving car market with little attachment to previous brands or the machismo of the gas-powered SUV.
It also helps that Chinese people generally drive within cities, not between them; EV range is still relatively limited compared to conventional vehicles. In China, the average annual mileage per vehicle has dropped slightly in recent years to around 11,000 kilometers (about 6,800 miles), compared to more than 20,000 kilometers (12,500 miles) in the United States. And electric vehicles have gone from a novelty to being everywhere, especially in the metropolises.
The Chinese government has also subsidized a large network of charging stations, which reached 8.6 million in 2023, making up 85 percent of fast chargers and 65 percent of slow chargers worldwide. (The United States only has around 64,000 chargers, most of them located in just a handful of states.) In China, wait times for chargers can still last more than an hour in key locations, but new battery swap programs may fix that.
The industry is moving so fast that Chinese EVs have an average shelf life of just 1.3 years—barely on the market before they’re pulled for a newer, better model. As a result, Chinese electric vehicles are not only good, but also cheap: as low as $19,000 for a full-sized car or $4,300 for a mini EV. All of this was funded in part by around $28 billion in subsidies between 2009 and 2022, but the industry is now mature enough that the government is phasing them out.
To be sure, Chinese EVs aren’t perfect. Safety standards in China are lower than in the stringent U.S. environment, although they are improving rapidly. Old models are also piling up in EV graveyards across the country, much as ride-sharing bicycles did after a boom and bust in the mid-2010s. But compared to the sluggish U.S. EV industry, China is years ahead.
That means that Chinese electric vehicles could hit the U.S. market like Japanese cars did in the 1970s and 80s, drowning out inferior U.S. goods through volume, quality, and price. The arrival of Japanese automakers came in part because they adapted to meet new environmental needs amid an oil crisis and increased regulation from the U.S. Environmental Protection Agency. Then, as now, there were U.S. drivers more concerned with appearance or size than with safety or sustainability—but they were and remain a market minority.
One of the problems with the United States looking back to the Cold War to formulate a China strategy is that in contrast with the Soviet Union, China makes brands that are globally competitive. U.S. consumers mostly haven’t realized how good and how cheap Chinese-made EVs are, and the new tariff increase will stop them from doing so. In theory, that protection will give the U.S. industry time to catch up rather than being flooded with Chinese goods.
But there’s a big question mark over whether the tariff increase serves U.S. interests, either for public needs or geopolitics. It’s also likely to stir up old divisions in the Biden administration between the hawks who see sticking it to China as a good in itself and the environmentalists who favor engagement. After all, Americans will be slower about switching to EVs if they’re left with costly options.
From the U.S. public’s point of view, the tariff increase blocks consumers from a mostly superior product. It also undermines the U.S. case against Chinese economic practices when Washington is happy to dip into the protectionist toolkit itself. Hypocrisy in global economic discussion will likely become even more common, especially if China keeps its market lead in a handful of key technologies. Playing catch-up isn’t a game that Washington is used to.