US PRESIDENT JOE BIDEN could have left the one off the front or added an extra zero to the end of the 100% tariffs he announced on May 14 on imports of Chinese electric vehicles (EVs) for all the difference tariffs will make to the US EV market.
The combination of the existing 27.5% tariff on Chinese goods and the local content requirements of the Inflation Reduction Act means no Chinese EVs are sold in the United States anyway.
If any Chinese EV maker is to make some US sales — and Geely, for one, aspires to do so, although tellingly under its Volvo brand — it will be of vehicles assembled in one of the plants Chinese EV manufacturers are setting up in Mexico to take advantage of the US-Mexico-Canada free trade agreement.
Election years tend to produce trade theatre and performative tariffs. Michigan is one of Biden’s battleground states in November’s presidential election. He needs to bolster his vote among unionised auto-making workers in Michigan and neighbouring Midwestern states.
His prospective rival, former President Donald Trump, has been claiming for months that Biden’s support for EVs would kill the US car industry.
For Biden, the potential electoral gains outweigh the risk of Chinese retaliation. Despite its belligerent rhetoric in response to the latest announcement, Beijing’s options are limited: impose tariffs or complain to the World Trade Organization. Neither will have much impact.
A novel, if unlikely, approach would be to sue the Biden administration in US court for violating Section 301 of US trade law, which the latest tariffs plausibly do.
EV adoption in the United States lags behind China and Europe. If anything, it is slowing. EV sales have become another polarising issue, mainly confined to Democratic-supporting states while Republican-dominated states shun them. So the US politics have become a question of ensuring US automakers get a bigger share of a diminishing pie.
In addition to the tariffs on EVs, justified on the grounds of unfair trade practices, the Biden administration has doubled those on solar cells to 50% and tripled those on certain steel and aluminium products to 25%. It says $18 billion of trade will be affected, although that is a drop in the $427 billion in goods that the United States imported from China in 2023.