The US is considering raising tariffs on Chinese electric vehicles (EV) and other goods as it tries to limit reliance on Asia’s biggest economy and shield its own green industry, the Wall Street Journal reported yesterday, citing people it did not identify.
While officials in US President Joe Biden’s administration have largely left in place former US president Donald Trump-era tariffs on about US$300 billion of Chinese goods, the White House and US agencies are debating the levies again, the sources said, with an eye on completing a review of the tariffs early in the new year.
Chinese EVs are subject to a 25 percent levy in the US, limiting their ability to enter the market. BYD Co (比亞迪), for example, does not retail its passenger vehicles in North America — despite being on the cusp of overtaking Elon Musk’s Tesla Inc as the world’s biggest seller of EVs.
Photo: EPA-EFE / Rungroj Yongrit
Raising those EV tariffs would therefore likely have little immediate impact on US consumers, the Journal reported.
Asked about the report, a Chinese Ministry of Foreign Affairs spokesman told reporters that tariffs “violate the principles of market economy and fair competition and undermine the security of the global industrial supply chain.”
“China firmly opposes this and urges the US side to abide by the WTO rules and provide a fair, just and nondiscriminatory business environment,” Chinese Ministry of Foreign Affairs spokesman Wang Wenbin (汪文斌) said at a regular press briefing, describing such measures as “protectionism.”
If the tariffs are raised, it would “limit access to affordable EVs and components, which will reduce the potential for scaling this technology,” said Bill Russo, founder and CEO of Shanghai-based advisory firm Automobility Ltd.
Even so, there has been increased political pressure in recent weeks in the US to ramp up tariffs against China. A bipartisan group of lawmakers earlier this month recommended raising tariffs on goods from China and further restricting investment into the country. US Senator Lindsey Graham on Wednesday said he would help draft sanctions “from hell” to impose on China if Beijing tried invading Taiwan.
The US is also gearing up for a presidential election next year, which might further fuel political tensions involving China. The Republican frontrunner is Trump, who launched the trade war during his tenure as he argued that Beijing had taken advantage of the US.
“Ahead of a presidential election, no candidate of any party loses votes by sounding tough on China trade,” ING Groep NV Asia-Pacific research head Robert Carnell said.
Increasing tensions over trade could hurt the recovery in China’s yuan, which is among the worst-performing currencies in Asia this year. The offshore yuan pared its gains after the Journal report, and was little changed against the US dollar at 7.1484 yuan.
“Overall, it seems not to be a broad-based tariff hike, and the impact on the yuan and broader Chinese markets should be limited,” Mizuho Bank Ltd chief Asian foreign exchange strategist Ken Cheung (張建泰) said. “The tariffs news is only in discussion so far.”
Other targets for potential tariff-rate increases are Chinese solar cell products and EV battery packs, sources familiar with the matter told the Journal.
While the US primarily imports solar cell material from Southeast Asia, China is still a huge supplier of EV batteries. Contemporary Amperex Technology Co Ltd (寧德時代), based in Ningde, Fujian Province, is the world’s biggest maker of EV batteries.
The Biden administration is also considering lowering tariffs on some Chinese consumer products that officials do not see as strategically important, the Journal said.
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