U.S. Lawmakers Push Biden to Consider Higher Tariffs on E.V.s Imported from China, Raising Concerns Over Price Increased for Americans
U.S. lawmakers have expressed concerns about competition from China and urged President Joe Biden to make imported products more expensive for Americans. In a bipartisan letter sent to U.S. Trade Representative Katherine Tai in November, lawmakers advocated for higher tariffs on electric vehicles (E.V.s) imported from China. The Trump administration previously imposed a 25-percent tariff on numerous Chinese imports, including a 2.5-percent tariff on imported automobiles. Since taking office, President Biden has chosen to maintain these tariffs, resulting in increased inflation and higher costs for Americans.
The letter, signed by representatives Mike Gallagher (R-Wis.), Raja Krishnamoorthi (D-Ill.), and others, argued that a 25-percent tariff is insufficient for E.V.s. It emphasized the need to raise tariffs to counter the rising influx of Chinese imports and protect the U.S. market against potential surges in Chinese vehicle sales. The lawmakers stated, It is only a matter of time before PRC manufacturers will be able to absorb the additional 25 percent tariff on PRC vehicles to access the U.S. market, referring to the People’s Republic of China.
Axios recently reported that the Biden administration is considering maintaining many of the controversial tariffs put in place by former President Donald Trump on around $300 billion worth of Chinese imports. Additionally, the administration aims to increase duties on electric vehicles and critical minerals like rare earth metals used in E.V. batteries. However, while the Biden administration is looking to support the purchase of E.V.s through the 2022 Inflation Reduction Act, which provides tax credits to buyers, the credits only apply to vehicles sourced and assembled in North America.
Speculation in the Axios report suggests that President Biden may be considering increasing tariffs to compete with former President Trump’s stance on China, hoping to avoid any accusations of being soft on the Asian powerhouse. However, these tariffs have the potential to impact American consumers by making products less affordable.
Citing concerns about Chinese clean-energy exports flooding global markets, U.S. officials have intensified discussions within the Biden administration. They worry that even with existing tariffs and new subsidies, American companies may struggle to compete with China’s production capabilities, potentially harming domestic businesses.
While the administration recognizes the challenges faced by American companies, it seems less concerned about increasing prices for Americans who are seeking affordable and energy-efficient products.
China has heavily subsidized E.V. production for over a decade, resulting in Chinese manufacturers, such as BYD, producing a staggering five million vehicles. As demand slowed, the Chinese government reduced its subsidies, leading Chinese automakers to aggressively drop prices. Consequently, European automakers have rushed to find ways to lower their own vehicle prices to remain competitive.
However, the 25-percent tariffs imposed on Chinese imports prevent American consumers from benefiting from these price reductions. European buyers can purchase Chinese E.V.s for less than $45,000, which is below the average cost of an E.V. in the United States. The tariffs make these foreign-made vehicles uncompetitive in the American market.
It’s important to note that the impact of tariffs extends beyond Chinese firms. Automakers such as Nissan and Tesla, which build vehicles in China for global sales, also face this trade barrier. The November letter from lawmakers acknowledged this fact, stating that many of the EVs exported from the PRC are made by Western brands, such as Tesla, that have significant production capacity in the PRC. Furthermore, U.S. automakers are increasingly shifting production to China for vehicles intended for the U.S. market, including models like the Buick Envision and the Lincoln Nautilus. This trend emphasizes the insufficiency of current tariff levels imposed on imported vehicles from China.
However, this shift in production may reflect American companies’ financial decisions to choose more cost-effective manufacturing options. Tariffs do not reduce the price of domestic products; instead, they make foreign-made products more expensive, eliminating affordable alternatives for American consumers.
The Biden administration’s recent discussions on raising tariffs highlight concerns over Chinese clean-energy exports and their impact on the global market. The Wall Street Journal reported in December that U.S. officials fear American companies won’t be able to compete with China’s production capabilities despite existing tariffs and subsidies.
As the Biden administration navigates these concerns, it is essential to consider the potential consequences for American consumers. Whether prices rise on imported E.V.s or domestic manufacturers struggle to compete, the impact on the wallets of everyday Americans cannot be overlooked. It remains to be seen how President Biden will balance competition with China and the affordability of energy-efficient products for American consumers.
In conclusion, U.S. lawmakers have voiced concerns over competition from China and have urged President Joe Biden to raise tariffs on electric vehicles imported from China. This move has the potential to increase prices for American consumers and dampen their ability to purchase energy-efficient products. The Biden administration is currently considering the matter, but the long-term implications for the affordability of electric vehicles and domestic manufacturers’ competitiveness remain uncertain.
