Biden Admin Set To Impose Tariffs On Chinese Electric Vehicles

The ongoing trade war between the United States and China could soon have a new front, which could send shockwaves through the electric vehicle (EV) market.

Reuters, citing two people familiar with the matter, reported that next week US President Joe Biden is set to announce new China tariffs that target strategic sectors including electric vehicles.

If the new tariffs are realised, it could trouble Elon Musk due to possible retaliation measures by Beijing.

Tesla is already losing ground in China due to intense competition, and of course Tesla has an important manufacturing plant in Shanghai.

Import tariffs

According to the Reuters report, the Biden administration’s announcement about import tariffs could take place as soon as next Tuesday.

The full announcement is expected to largely maintain existing levies, according to one of the people. An announcement could also be pushed back, the person told Reuters.

Specific sectors were also set to include semiconductors and solar equipment, according to one of the people.

Reuters noted that there is very few details on the precise value or categories of tariffs that would be imposed on Chinese imports, but the Biden administration is said to have zeroed in on areas of interest within strategic competitive and national security areas, according to one of its sources.

Multiple sources told Reuters that the US Trade Representative’s office already made their recommendations to the White House weeks ago, but a final announcement was delayed as the package was debated internally.

This potential significant move by the United States comes amid the upcoming US Presidential elections in November.

Republican candidate Donald Trump has already proposed across-the-board tariffs against China, which White House officials view as too blunt and prone to spark inflation.

The White House and the office of the US Trade Representative declined to comment, Reuters reported.

Legal action

It should be remembered that Tesla and other major car makers including Volvo, Ford and Mercedes-Benz actually sued the US government in September 2020 in protest at the tariffs imposed by Donald Trump on Chinese imports.

They sought to end what it described as President Trump’s “unlawful” tariffs on Chinese-made components, and Tesla also sought a refund on all duties paid – plus interest.

In March 2023 the Court of International Trade ruled in favour of the federal government, leaving the tariffs in place for now.

The case is currently at the Court of Appeals for the Federal Circuit.

Similar legal action could be expected if the Biden administration implements new tariffs.

Beijing retaliation

And if the United States does press ahead with the new tariffs, all eyes will turn to Beijing and possible retaliatory moves.

Reuters noted that the broader imposition of tariffs during the 2017-2021 Trump presidency, had prompted China’s retaliation with its own levies

The increasing trade war between the world’s two biggest economies could have global implications.

President Biden for his part has previously said he does not want a trade war with China, despite the growing competition between the two nations.

In 2022, President Biden had launched a review of the Trump-era policy under Section 301 of the US trade law. Last month, Biden reportedly called for sharply higher US tariffs on Chinese metal products.

Biden also launched an investigation into Chinese trade practices across the shipbuilding, maritime and logistics sectors, a process that could lead to more tariffs, Reuters noted.

The Biden administration has also reportedly been pressuring Mexico to prohibit China from selling its metal products to the United States indirectly from there.