Biden is rumored to announce a quadrupling of tariffs on Chinese electric vehicles, up to 100%.

The US government is reportedly set to announce broader tariffs on several categories of Chinese products, including various green products like solar panels and batteries, medical products, and in particular an increase in tariffs on Chinese electric vehicles from 25% to 100%.

Rumors were first reported Thursday evening that the tariffs would be extended after a multi-year review of the “Section 301 tariffs” that were implemented under the previous administration.

Today, the Wall Street Journal reported that those tariffs would not just be extended, but expanded, with tariffs on Chinese-made electric vehicles quadrupling from previous levels.

Currently, all cars made in China are subject to a 25% tariff when imported into the United States, in addition to an additional 2.5% duty that all cars made in China are subject to. foreign, for a total of 27.5%. These high tariffs have had the effect of excluding Chinese automobiles from the US market because it is easier to export first to countries with lower tariffs.

However, given that Chinese EVs are incredibly affordable, even a 25% tariff could still result in competitive pricing. For this reason, most observers considered it inevitable that Chinese electric vehicles would eventually be sold in the United States.

It appears that Biden also decided that the 25% tariff would not be enough to prevent this advance, and instead decided to quadruple it to 100%, meaning that Chinese electric vehicles will effectively sell for double the price they would have otherwise if they were brought to the United States. Although it has not yet been announced and the White House declined to comment, an announcement on the new tariffs is expected Tuesday.

Tariffs have been requested by several entities in the United States (and Europe), as Chinese manufacturing of electric vehicles has rapidly expanded in recent years.

Initially, China was somewhat slow to adopt electric vehicles: in 2015, the market share of electric vehicles was only 0.84%, similar to the US market share of 0.66% and well below California, at 3.1% at the time. But by 2023, the United States’ market share had fallen to a measly 7.6% and California’s to just 21.4%, while China’s electric vehicle market share was 37%. thus surpassing several other leading countries (and it was only 5% in 2020). the upward turnaround has therefore been very rapid over the last 3 years). This surprised foreign manufacturers, leaving the value of ICE cars to fall in China as consumers simply weren’t interested.

Despite the massive increase in Chinese interest in electric vehicles, electric vehicle manufacturing has grown even faster. That left Chinese automakers with enough vehicles for the export market, and they began exporting so many to Europe that they couldn’t find enough ships to transport them.

These electric vehicles haven’t arrived in the United States yet, but most think it’s inevitable that they will soon. But with these increased tariffs, it’s a little less likely that U.S. consumers will have access to these cheap, high-tech Chinese electric vehicles.

This is not the first action Biden has taken to limit the Chinese auto industry’s ability to operate in the United States. The Inflation Reduction Act, which updated the U.S. electric vehicle tax credit, included protectionist measures aimed at barring electric vehicles of Chinese origin from taking advantage of the credit. To qualify, electric vehicles must be assembled in America and must have a certain percentage of components sourced from the United States or U.S. free trade countries, and cannot include parts from “foreign entities of concern” ( although there are several ways around this).

The net effect of the regulation is that batteries from China have a harder time accessing U.S. tax credits, reducing their competitiveness in the U.S. market.