In a move aimed at protecting the US electric vehicle (EV) industry, President Joe Biden has announced a 100% tariff on Chinese-made EVs. The decision comes as part of the administration's ambitious goals of achieving a carbon pollution-free power sector by 2035 and a net zero emissions economy by 2050.

The tariffs are intended to prevent the US market from being flooded with low-priced Chinese EVs, which could undercut domestic manufacturers and stifle innovation. By imposing these tariffs early, the Biden administration hopes to give the US EV industry room to grow and ensure a stable supply of components through domestic manufacturing.

Tinglong Dai, an expert in global supply chains from Johns Hopkins University, supports the Biden tariffs, arguing that Chinese companies have a competitive advantage due to lower production costs, looser environmental and safety standards, cheaper labor, and more generous government EV subsidies. The tariffs aim to level the playing field and protect American auto sales from being undercut.

Furthermore, the tariffs have the potential to mitigate the risks associated with global supply chain disruptions and geopolitical tensions. Experts believe that Biden's decision could encourage similar protective actions globally, reinforcing the trend of securing supply chains and promoting domestic manufacturing.

However, there are contrasting opinions on the impact of the tariffs. An editorial in Yahoo! Finance criticizes the decision, suggesting that it stifles competition in the lower end of the car market and slows down the transition to zero-emission vehicles. The article argues that the affordability gap will persist and hinder the US in rapidly reducing its reliance on fossil fuels. Nonetheless, proponents remain hopeful that US automakers will take the opportunity to innovate their EV lines.

It is worth noting that currently, aside from the Polestar 2 and the upcoming Volvo EX30, there are no Chinese-made EVs available for sale in the US. Top domestic EV maker Tesla, along with other automakers like GM, Ford, Volkswagen, and Hyundai, have invested heavily in battery and EV factories in the US. However, except for Tesla, automakers in the US, Europe, and Japan lag behind Chinese companies in scale, raw materials production, and key technologies.

The new tariffs specifically target Chinese-made EV batteries, aiming to increase the tax on imported batteries from 7.5% to 25%. As China has heavily subsidized its EV industry, the country has developed a strong battery manufacturing sector, with CATL being the world's biggest maker of EV batteries. The tariffs will impact EV makers like Tesla and Ford, potentially increasing their production costs by thousands of dollars.

The focus on tariffs is driven by the US government's interest in protecting the American EV industry and its labor force. The US is closely monitoring vehicles containing Chinese batteries, such as the Ford Mustang Mach-E and the all-wheel-drive variant of the Toyota bZ4X. However, vehicles assembled in Mexico and Japan are exempt from the tariffs. Ford and Toyota may leverage this exemption to maintain their competitive edge in the market.

As the US-China relationship remains complex, the timing and strategic significance of these tariffs are critical in effectively addressing the dynamics between the two countries. The Biden administration aims to shift from a reactive to a proactive approach, leveraging the strengths of the US to protect its domestic EV industry while promoting cleaner and sustainable transportation.

Overall, the imposition of tariffs on Chinese EVs reflects the Biden administration's commitment to supporting the growth of the American EV industry, safeguarding jobs, and ensuring a secure supply chain. As the US looks ahead to its zero-emission goals, the impact of these tariffs will unfold, shaping the future of the EV market in the country.