The White House also plans to more than triple tariffs on Chinese EV batteries and battery parts to 25%. Graphite, permanent magnets used in EV motors and other EV minerals would get new 25% duties added. These tariffs could affect a broader range of vehicles.
Also solar cell tariffs that are set to double from 25% to 50%. There will also be a bump in semiconductor tariffs from 25% to 50%.
Without access to lower-cost batteries and battery materials made in China, EVs will be too expensive for mainstream U.S. consumers, automakers have said.
Chinese retaliatory tariffs that targeted U.S. vehicles could hurt workers at the BMW factory in Spartanburg, South Carolina, which sends about 25,000 vehicles to China per year, or the Mercedes-Benz SUV plant in Alabama that builds electric SUVs sold in the world’s largest market.
A clean-technology trade war between the United States and China could also drive up the costs of EVs, batteries and other EV hardware, keeping overall EV prices high, industry executives and some analysts said. EVs wearing U.S. brands, such as the Mustang Mach-E or Tesla Model 3, have 30% to 51% Chinese content, according to U.S. Transportation Department data.
“From the battery, from the mining, from all the technology integration, the Chinese supply chain now is the leading supply chain. It’s the best,” Stella Li, head of Chinese EV and battery maker BYD’s operations in the Americas, said at the Milken Conference last week. “Why don’t you allow a U.S. company to have the freedom to choose the best supplier?”
Experts are divided over whether stronger tariff protection will help U.S. automakers in the long run, or work to the benefit of consumers.
“The tariffs buy important time,” said Michael Dunne, a consultant who has watched the Chinese auto industry for years. “The U.S. is five to seven years behind China when it comes to electric vehicles and battery supply chains.” China protected its automakers in the 1990s and 2000s, Dunne said. “U.S. political leaders could rightly say we are just borrowing a page from China’s playbook.”
I would say US political & corporate leaders ALWAYS operate on the short term view. US off-shoring policy reduced US industrial might within the country and laid waste to US blue collar workers & set up the Covid supply chain collapse. China recently seems to operate with a long term view. The China exception was that they really shot themselves, maybe fatally with the one child policy in the past.
BYD’s recent announcement that it plans to build an electric pickup truck in Mexico transforms a hypothetical threat into a real one for incumbent U.S. automakers. A Mexican-made EV with sufficient North American-sourced parts could qualify for tariff-free entry to the U.S. market.
BYD will utilize the same strategy in the EU with its new factory in Hungary. That plant is currently under construction.
I expect the Chinese will follow the Japanese path of building factories eventually in the USA.