The Biden administration is considering raising tariffs on Chinese EVs above 25%, The Wall Street Journal reported Thursday.
The administration has left in place Trump-era tariffs on roughly $300 billion of Chinese goods, but is now considering additional tariffs, according to the report, which cited anonymous sources familiar with the matter.
Chinese EVs are already subject to a 25% tariff, which comes on top of a 2.5% tariff on imported cars, The Wall Street Journal noted, adding that the current tariff has already largely blocked subsidized Chinese automakers from making inroads into the U.S. market.
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Tariff increases for Chinese solar products and EV battery packs are also being considered, according to the report. This would follow restrictions on tax-credit qualification for EVs with Chinese battery components. Starting January 1, U.S. “foreign entity of concern” requirements will exclude a growing number of EVs from the tax credit due to Chinese content.
As The Wall Street Journal notes, increased trade restrictions would allow President Biden to appear tough on China in an election year. But high tariffs could also exclude affordable Chinese EVs from the U.S. market, slowing the rate of EV adoption and thus going against another Biden policy goal.
Chinese electric vehicles have elbowed in for a large part of the market in Europe. Only recently have governments stepped in with steeper restrictions on incentives for China-made models—France just this past week, for instance.
They’re also strong in Mexico—where, recently, the Chinese automaker BYD started selling its Seal, one of the strongest rivals to the Tesla Model 3 yet—although it’s potentially the cheaper models the Biden administration is a little more worried about.
Polestar continues to see the numbers work for “made-in-China” with its Polestar 2, although that’s a more upscale vehicle. And Polestar has found a workaround to the tax-credit restrictions with South Korea assembly for its upcoming Polestar 4, as well as U.S. production for its Polestar 3.