US to increase tariffs on China’s EVs, batteries, solar cells and computer chips

The Biden administration today announced much higher tariffs on essential goods from China that the US will need to meet its climate goals. The move targets transportation, clean energy technologies, raw materials and more.

“To encourage China to eliminate its unfair trade practices in technology transfer, intellectual property and innovation, the President is directing tariff increases in strategic sectors such as steel and aluminum, semiconductors, electric vehicles, batteries, minerals critical, solar cells, ships – shore cranes and medical products”, a White House Fact Sheet it says.

It is the latest measure taken by the US amid efforts to increase domestic production and, at the same time, increase trade tensions with China. In short, the tariff increase is expected to affect approximately US$18 billion in annual imports.

When it comes to EVs, the Biden administration is doubling down on tactics to block Chinese manufacturers from entering the US. Chinese-made EVs are much more affordable than other options — about $10,000 for BYD’s Seagull, compared to about $40,000 for Tesla’s cheapest model. But high tariffs have effectively prevented China from importing its electric vehicles to the United States. Now, that tariff is jumping to 100%, compared to the current level of 25%.

Higher tariffs on batteries, semiconductors and critical minerals could also affect the US electric vehicle industry. Tariffs on battery parts and lithium-ion batteries for electric vehicles will increase from 7.5% this year to 25%. A similar increase for non-EV lithium batteries will take effect in 2026. By 2025, China’s semiconductor tariff will double to 50 percent.

Tariffs on permanent magnets, natural graphite and some other critical minerals are also expected to increase from zero to 25% in the coming years. Graphite is used in batteries, solar panels and steelmaking. Certain steel and aluminum products will see tariffs rise to 25%, from the current zero to 7.5%.

Meanwhile, US-based solar manufacturers are celebrating the decision to increase tariffs on solar cells to 50% from the previous 25%. “The administration made the right decision by strengthening protections for the solar components we intend to build in the U.S.,” said Mike Carr, executive director of the Solar Manufacturers Coalition for America, in an emailed petition.

Solar Manufacturers in the USA urged the Biden administration imposed tariffs on solar panels from four Southeast Asian countries earlier this year, following a Commerce Department determined investigation that Chinese companies were getting around tariffs by transporting goods through other countries.