The Biden administration in the United States is expected to announce a comprehensive decision on tariffs against China as early as this Tuesday, according to Bloomberg News on May 9, 2024. This is expected to target key strategic sectors while rejecting the comprehensive tariff hike pushed by former President Donald Trump.
The U.S. government plans to impose new tariffs on several key sectors in China, including electric vehicles (EV), batteries, and solar equipment. The full announcement is also expected to largely maintain existing levies. Bloomberg reported, citing an official, that the formal announcement is scheduled for May 14.
This decision is the final result of a review of the so-called “Section 301” tariffs first imposed during the Trump administration, and the detailed content has not been immediately disclosed, it was pointed out.
On May 10, the Wall Street Journal (WSJ) reported the tariffs on Chinese-made EVs will be expanded, not extended, with tariffs on Chinese cars quadrupling from previous levels.
Currently, a 25% tariff is imposed on Chinese-made cars imported into the U.S., with an additional 2.5% tariff applied to all foreign-made cars, resulting in a total tariff of 27.5%. This high tariff rate has effectively excluded Chinese-made cars from the U.S. market because it is easier to first export to countries with lower tariffs.
However, given that Chinese-made EVs are incredibly cheap, they can still offer competitive prices even with a 25% tariff. For this reason, most experts believed it was inevitable that Chinese-made EVs would eventually be sold in the United States.
Therefore, President Biden seems to have decided to increase the tariff fourfold to 100%, judging that a 25% tariff is not enough to prevent a tariff hike. This means that if Chinese-made EVs are launched in the U.S., they will be sold at twice the price. While this has not yet been announced and the White House has declined to comment, the announcement of the new tariffs is expected to be made on Tuesday.
Exports of Chinese-made EVs are growing to the point where there are not enough ships to transport them currently. Chinese-made EVs have not yet entered the U.S. market, but most are expected to launch soon.
The Biden administration is pursuing the entry of Chinese-made cars into the U.S. and reshoring through the IRA. However, it seems to have raised the tariff barrier again, thinking that it alone is not enough.
While only a small number of Chinese-made EVs have been imported into the U.S. now, some industry participants are calling for China to be more receptive to Chinese-made cars.
William Li, the founder, chairman, and CEO of NIO, said on the 4th, “We have a few test vehicles in our U.S. office, and the one I drove to the airport today was the ES8. I hope Chinese-branded vehicles will soon be sold in the U.S.”
He recently visited the U.S. during the Labor Day holiday and met with Jensen Huang, CEO of semiconductor giant Nvidia, to discuss the direction of artificial intelligence (AI). Reuters reported that in a speech at Harvard University on April 13, he called for cooperation in an increasingly divided world.
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