Chinese EVs are latest victim of US tariffs

The US government continues to expand its tariff hit list against China.

• The victim this time? China’s electric vehicle (EV) exporters.

The Biden administration is set to announce on Tuesday that it will quadruple the current 27.5% tariff rate on Chinese EV imports to 102.5%.

• This is expected to come as part of a comprehensive package of tariffs targeting key Chinese industries – including steel, aluminum, solar panels, and ships, among others.

Some context: While Chinese EV exports have begun flooding key markets across the EU and Southeast Asia in recent years, they have barely registered in the US.

• In 2023, the US imported a mere 12,500 Chinese EVs, a tiny fraction of the 460,000 exported to Europe.

Get smart: Given the insignificant number of Chinese EV exports to the US, the new tariffs will have very limited economic impact.

• Instead, they simply formalize the fact that the US market will remain off-limits to Chinese exports for the foreseeable future, a reality that Beijing and most firms were already anticipating.

Get smarter: Like their solar counterparts, Chinese EV companies will try hard to ramp up manufacturing and exports through tariff-free third countries in order to circumvent US trade restrictions, to access the US market through the back door.

• Expect increased efforts from the Biden administration, in collaboration with allies, to prevent this from happening.