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China makes cheap and high-quality electric vehicles. Why does the US want to stop you from buying one?

Photo illustration: Victoria Ellis for Yahoo News;  photos: Getty Images
Photo illustration: Victoria Ellis for Yahoo News; photos: Getty Images

President Biden announced new tariffs on some Chinese products on Tuesday, including a whopping 100% tariff on Chinese-made electric vehicles (EVs). The policy could keep the world’s most popular and affordable electric vehicles off U.S. roads.

“We’re going to protect American auto workers,” Biden told Yahoo Finance shortly after announcing the new tariffs, which he said were intended to derail China’s plan to “flood the market with vehicles electricity” and “put everyone out of business”.

The reason the president believes workers at companies like Ford and General Motors need protection is because China has quickly become a dominant global force in electric vehicle production. Thanks to significant government investment, cheap labor, and their country’s robust reserves of key minerals, Chinese automakers have developed a wide range of electric vehicles that are comparable in quality to anything else on the market. made in the USA, but often sell for a fraction of the price.

Biden sees electric vehicles, which are far more efficient than gasoline-powered cars, as a critical part of the green energy transition needed to stave off the “existential threat” of climate change. To help Americans make the switch, he pressed Congress to pass bills providing generous subsidies to make electric vehicles more affordable and billions of dollars to help build the nation’s charging infrastructure.

But the adoption of electric vehicles in the United States has been relatively slow and has even recently shown signs of stagnation. One of the main reasons for this is that American electric vehicles are expensive. The average new electric vehicle sold in the United States last year cost more than $55,000, and the cheapest available are still around $30,000.

In China, many of the most popular electric vehicles sell for around $12,000 – and some budget models cost less than the average electric bike. These low prices have led to an explosion in electric vehicle sales in China. Last year, more new electric vehicles were registered there than in the rest of the world combined. BYD, China’s largest electric vehicle company, has also overtaken Tesla to become the largest electric car producer on the planet.

Very few Chinese electric vehicles have arrived in the United States, in part because of the 25% tariffs in place. The new 100% tariff will effectively double the purchase price if Chinese automakers decide to try to sell their cars in the United States.

China’s electric vehicle boom has brought two of Biden’s top priorities into direct conflict. Welcoming them into the U.S. market could provide a huge boost to America’s green transition, but it could also deal a major blow to the U.S. auto industry — and possibly cost many auto workers their jobs.

With this new tariff, Biden made clear that he believes the dangers of Chinese electric vehicles far outweigh the potential climate benefits. According to him – a view shared by American automakers, their workers unions and former President Donald Trump – there is simply no way for American companies to compete with the “unfair (trade) practices of China “. Cheap Chinese electric vehicles could become an “extinction-level event” for the U.S. auto industry, according to the Alliance for American Manufacturing. Supporters of the tariff say the United States needs more time to develop a domestic electric vehicle industry that is sustainable, efficient and able to compete in the global market.

But critics of the plan say Biden is betraying his climate goals and denying American consumers affordable electric vehicle options they desperately need so Detroit can be saved from its own mismanagement of the electric vehicle market. They fear that shielding U.S. automakers from real international competition will allow them to cling to their failing business model indefinitely and ultimately leave the United States hopelessly behind the rest of the world.

Biden told Yahoo Finance that he expects China to retaliate against its new tariffs, but it’s unclear what form that retaliation might take or how it might affect U.S. consumers. Chinese automakers are reportedly looking to start making electric vehicles in Mexico to get around new tariffs, but the White House says the U.S. could impose new trade restrictions to close this potential backdoor into the U.S. market.

The US auto industry will die if forced to fight China on flat ground.

“There are few things that could decarbonize the United States faster than $20,000 electric vehicles. But there’s also probably nothing that can kill the American auto industry faster.” — David Autor, economist at MIT, to the Atlantic

Biden Shouldn’t Save US Automakers From Their Own Bad Decisions

“For years, American companies simply didn’t care about the development of electric vehicles, unlike Chinese companies. Detroit should not be rewarded for its lack of vision, nor should consumers be penalized for it. —Micheline Maynard, Boston Globe

The United States cannot allow China to take over the future of green energy

“In the long term, tariffs could have beneficial effects on the climate by preventing a single country from forming its own clean energy cartel. The Chinese government has a long history of using economic coercion to achieve desired political goals. It is naive to believe that Beijing would not exercise this same leverage in certain areas of clean energy.” —Joseph Webster, Atlantic Council Senior Fellow

Winning the election is the most important thing Biden can do for America’s climate future

“Politically, Biden has little choice, given his opponents and the threat to his domestic manufacturing agenda, where he has a good story to tell at the moment. Workers on the front lines of China’s entry into the auto market live in Midwestern states. Biden must win to be re-elected; The heart of the manufacturing renaissance is in red states, where Democrats must gain a foothold.” — David Dayen, American hopeful

Without real competition, American electric vehicles will never improve

“In a market where affordable, forward-looking products are excluded, the U.S. auto industry risks becoming complacent. This could harm consumers and cause U.S. automakers to fall behind their competitors in foreign markets.” —Bryan Pietsch, Washington Post

Detroit has everything to defend itself without government help

“But instead of effectively banning competition from giving Americans access to new, affordable electric vehicles, the United States should instead try making new affordable electric vehicles yourself.” —Jameson Dow, Electrek

Detroit must be protected but not forever

“In the short term, U.S. automakers…need to be protected against a wave of cheap cars. But in the long run, Mr. Biden must be careful not to isolate the U.S. auto market from the rest of the world, thereby turning the United States into a backwater of bloated, expensive, gas-guzzling vehicles. —Robinson Meyer, New York Times

Americans don’t want what China sells

“Americans expect much more from their vehicles,” they tell us, with their wallets: roominess, luxury, technological refinement, amenities. This is especially true for the electric vehicles they buy, which tend to be large, powerful and luxurious, and therefore notoriously climate-unfriendly. The threat of the super-cheap Chinese plug-in vehicle is therefore exaggerated.” —Holman W. Jenkins Jr., Wall Street Journal

Tariffs will mean Americans will continue to pay more for worse-quality cars.

“The idea that this policy helps the American middle class as a whole is laughable. … Barriers to importing cheap cars worsen inflation and reduce real incomes of the middle class.” —Dylan Matthews, Vox

China dominates a race no one should want to win

“China being a leader in bad technology is like bragging about being the best LaserDisc maker in the world… uh, congratulations?” — Luther Ray Abel, National Review


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