Biden to quadruple tariffs on Chinese EVs

China is the world's biggest electric car market, where shiny smart screens, assisted driving and sophisticated map technology are in high demand. (Photo: AFP)
China is the world's biggest electric car market, where shiny smart screens, assisted driving and sophisticated map technology are in high demand. (Photo: AFP)

Summary

The administration is preparing to announce higher levies on a range of Chinese goods next week

WASHINGTON—The Biden administration is preparing to raise tariffs on clean-energy goods from China in the coming days, with the levy on Chinese electric vehicles set to roughly quadruple, according to people familiar with the matter.

Higher tariffs, which Biden administration officials are preparing to announce on Tuesday, will also hit critical minerals, solar goods and batteries sourced from China, according to the people. The decision comes at the end of a yearslong review of tariffs imposed by former President Donald Trump on roughly $300 billion in goods from China.

Whether to adjust the Trump-era levies divided Biden economic advisers for years, with trade officials pushing for higher duties and others like Treasury Secretary Janet Yellen calling for lowering tariffs on consumer goods. But signs that China was ramping up exports of clean-energy goods prompted broad concern in Washington, where officials are trying to protect a nascent American clean-energy industry from China.

Officials are particularly focused on electric vehicles, and they are expected to raise the tariff rate to roughly 100% from 25%, according to the people. An additional 2.5% duty applies to all automobiles imported into the U.S. The existing 25% tariff on Chinese electric vehicles has so far effectively barred those models, often cheaper than Western-made cars, from the U.S. market. Biden administration officials, automakers and some lawmakers worry that wouldn’t be enough given the scale of Chinese manufacturing.

Bloomberg earlier reported that the administration is planning to announce higher tariffs next week. Administration officials cautioned that the timing of the announcement could change. A White House spokesman declined to comment.

A spokesman for the Chinese foreign ministry denounced the Biden administration’s plans in a briefing on Friday, saying the tariffs have disrupted trade between the two countries. “China will take all necessary measures to defend its rights and interests," the spokesman said.

The upcoming presidential rematch is shaping Biden’s decision. As Trump campaigns for a return to the White House, the former president has said he is considering imposing tariffs of 60% or more on all Chinese imports—a move likely to escalate the trade war with Beijing he started in his first term. Trump has warned that the U.S. auto industry would face a “bloodbath" if he loses in November, and he has pledged to impose stiff tariffs on Chinese-made vehicles that are imported into the U.S. US-China

In the race to win swing states like Pennsylvania and Michigan, Biden has promised to protect American industry and workers from foreign competition. Campaigning in Pennsylvania last month, Biden said he would significantly raise tariffs on steel from China.

“These are strategic and targeted actions that are going to protect American workers and ensure fair competition," Biden said at the time.

The trade moves are weighing on U.S.-China relations. The two superpowers have spent months trying to stabilize diplomatic relations after years of acrimony over Taiwan, Russia’s invasion of Ukraine and access to advanced technology.

As its broader economy slumps, Chinese officials are leaning into clean-energy production in a bid to stimulate overall growth. In a trip to China last month, Yellen repeatedly warned Chinese officials against the strategy, saying that the rest of the world will take steps to counteract a wave of inexpensive Chinese exports that undercut their own industries.

“China is too large to export its way to rapid growth," she told officials in Guangzhou, a metropolis in China’s industrial south. The European Union is also weighing raising tariffs on Chinese electric vehicles.

Chinese officials have publicly dismissed Western criticisms about their export practices, and last month Beijing slapped a levy on imports from the U.S. of a widely used chemical.

Trying to bar the most affordable electric vehicles from the U.S. market will put pressure on another Biden administration goal: reducing carbon emissions to mitigate the worst effects of climate change. The U.S. is pouring hundreds of billions of dollars into developing clean-energy industries in the U.S., but the Biden administration is trying to do so independently of China—the global leader in clean-energy manufacturing.

Write to Andrew Duehren at andrew.duehren@wsj.com and Andrew Restuccia at andrew.restuccia@wsj.com

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