Will Biden's tariffs hinder China's EV dominance?

Elon Musk can breathe easy: The cheap Chinese electric vehicles dubbed "Tesla killers" won't have much chance to make inroads in the United States. That's because President Joe Biden announced steep new tariffs on Chinese EVs, NPR said, in a bid to protect American carmakers. "Folks, look: I'm determined that the future of electric vehicles will be made in America, by union workers, period," Biden said. 

What's the threat? BYD, the increasingly dominant Chinese carmaker, has a new model called the Seagull that sells for around $12,000. Those low prices "could shake up the global auto industry in ways not seen since Japanese makers exploded on the scene during the oil crises of the 1970s," said The Associated Press. American EVs are much more expensive, thanks both to higher U.S. labor costs and the Chinese head start on battery technology. The tariffs might give American carmakers a chance to catch up. "Don't take anything for granted," said Ford CEO Jim Farley.

What did the commentators say?

"Chinese-made electric vehicles haven't played a sizable role in the U.S. market, at least not yet," Joseph Webster said at the Atlantic Council blog. There's a dilemma, though: "Electric vehicles help accelerate decarbonization," which is important for meeting the world's climate change goals, "but leaving Western electric vehicle supply chains in the hands of a formidable rival poses obvious economic and strategic risks."

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Biden's goal has always been to "both electrify transportation and green the planet and support good-paying domestic auto jobs," David Dayen said at The American Prospect. Finding the balance is tricky: Environmental advocates "undoubtedly see Chinese EVs as a way to penetrate lower-income sectors of the economy." At the end of the day, though, "U.S. automakers, and those automakers with plants in the U.S., have to survive."

"Tariffs won't stop China's electric vehicle dominance," Ralph Schoellhammer said at UnHerd. Instead, Biden's move signals "broader desperation" that is a consequence of making "idiotic laws" to shift American drivers from gasoline-powered cars to EVs. That decision "will turn out to be the world's greatest subsidies program for cars made in China."

What next?

China signaled it will retaliate against the new tariffs, The New York Times said. "China will take resolute measures to defend its rights and interests," the Ministry of Commerce said. American officials, though, said China had earned the tariffs — which also included new fees for imported steel, solar panels and other items — through a combination of heavy subsidies to its industries and intellectual property theft.

The question now is how the new tariffs will play with American voters. "Analysts and automakers warn that a trade battle with China could raise costs for EVs," said USA Today. Economists tend to regard tariffs as an "extra tax on consumers" who have to pay the higher prices on imported goods. Observers have noted that Biden's announcement will help his efforts to win over Michigan autoworkers. The White House denied it had political motives in announcing the new fees, but "it's impossible to ignore that the 2024 election is now six months away."