The US government has announced wider tariffs on several categories of Chinese goods, including various green products like solar panels and batteries, medical goods, and in particular an increase of tariffs on Chinese EVs from 25% to 100%.
Rumors were first reported last week that tariffs on Chinese-made goods would be extended and expanded after a multi-year review of “section 301 tariffs” that had been implemented under the previous administration.
Previously, all cars made in China were subject to a 25% tariff when imported to the US, on top of an additional 2.5% tariff that all foreign-made cars were subject to, totaling 27.5%. This large tariff has had the effect of excluding most Chinese autos from the US market, as it’s easier to export to countries with lower tariffs first.
However, given Chinese EVs are incredibly affordable, even a 25% tariff might have resulted in competitive prices. For this reason, it was considered inevitable by most observers that eventually Chinese EVs would make their way into being sold in the US.
It seems that Biden has also decided that the 25% tariff wouldn’t be enough to forestall China’s advance, and has decided to instead quadruple it to 100%, meaning that Chinese EVs will effectively sell for double the price they would otherwise if brought to the US.
The move also includes increased tariffs on batteries, battery minerals, solar panels, steel and aluminum, and computer chips. Most of these tariffs go into effect this year, though some will be imposed next year, and there is a tariff exclusion process available for certain exceptions. A list of what products are targeted is available on this White House fact sheet.
Currently only two EVs in the US are made in China, the Polestar 2 EV and Volvo S90 Recharge Plug-in Hybrid. Both companies are owned by Geely, but still headquartered in Sweden, with manufacturing in various parts of the world depending on model.
But the excellent Volvo EX30 is set to release this year at a starting price of $35k, which was inclusive of the 25% tariff. With no other changes, its price would rise to ~$54k – unless or until Volvo moves production out of China, something BYD has also considered in order to enter the US market.
We reached out for comment from both Volvo and Polestar, and this is what we heard back:
As a global manufacturer Volvo Cars is in favor of free trade and open markets. Free trade creates jobs, wealth and economic growth. Volvo believes strongly in the benefits of investing and contributing to the main markets in which it seeks to sell cars, reflected in our $1B South Carolina manufacturing plant where we are creating thousands of jobs building EVs for the US and world markets.
-Volvo spokesperson
We are currently evaluating the announcement of tariff increases from the Biden Administration. As a global company headquartered in Sweden, listed on NASDAQ in New York and operating across 27 markets, we believe that free trade is essential to speed up the transition to more sustainable mobility through increased EV adoption. Production of Polestar 3 is set to begin in South Carolina in the summer diversifying our manufacturing footprint and supporting job creation and economic growth in the region. This important SUV for us will be built in the USA for U.S. and Canadian customers as well as for export to European markets.
-Polestar spokesperson
Unfortunately, neither company was able to provide more details on their current plans for various models – in particular, the two models mentioned above, and the upcoming EX30. We imagine more info will come on that soon.
In general, reaction to the move was positive from domestic manufacturing trade associations and labor groups, but negative from economists, consumer advocates and foreign/global manufacturers. And negative, of course, from China, whose Ministry of Commerce said it “will take resolute measures to defend its rights and interests.” This likely includes a lawsuit in front of the World Trade Organization and/or retaliatory tariffs, as is usually the case in trade wars like this.
These tariffs had been called for by several entities in the US (and Europe), as Chinese EV manufacturing has rapidly ramped in recent years.
China was originally somewhat slow to adopt EVs – in 2015, EV market share was just .84%, similar to the US market share of .66% and well below California at 3.1% at the time. But in 2023, US market share had risen to a meager 7.6% and California to just 21.4%, whereas China’s EV market share was a whopping 37%, leapfrogging several other leading countries in the process (and it was just 5% in 2020, so the turn upwards has been very rapid over the last 3 years). It caught foreign manufacturers by surprise, leaving ICE car values plummeting in China as consumers are simply not interested.
Despite the massive swing upwards in Chinese EV interest, EV manufacturing has risen even more rapidly. This has left Chinese automakers with more than enough vehicles for the export market, and they have started exporting so many to Europe that they can’t find enough ships to carry them.
Those EVs haven’t made their way to the US yet, but most thought that it was inevitable they would soon. But with these increased tariffs, that makes it less likely that US consumers will gain access to these cheap, high-tech Chinese EVs.
This isn’t the first move that Biden has made to limit the ability of the Chinese auto industry to operate in the US. The Inflation Reduction Act which updated the US EV tax credit included protectionist measures to disallow Chinese-sourced EVs from taking advantage of the credit. To qualify, EVs must be assembled in America and must have a certain percentage of components sourced in the US or US free trade countries, and can’t include parts from “foreign entities of concern” (though there are some ways around this).
The net effect of the IRA is that batteries sourced from China have a harder time getting access to US tax credits, thus reducing their competitiveness in the US market.
The basic idea is that protectionist trade measures generally cause more chaos than they’re worth, fail to protect the industries they are intended to protect, and lull industry into a false sense of security thus making it less competitive in the long run. If protectionist measures are needed, it’s better to encourage domestic industry with incentives than to implement tariffs.
And Biden has implemented targeted incentives and regulations to help the domestic EV industry – the Inflation Reduction Act, various EPA regulations and grants, and so on – most of which have helped to keep prices down for Americans while making the US more competitive in EV manufacturing.
But it seems like there’s no way these particular tariffs don’t increase the price of goods for Americans, which is something America (and the world) is struggling with right now.
The administration says that it does not expect much overall inflation because these tariffs are aimed at industries which Biden has targeted for growth, but for us in the EV world, that means prices of the main thing we follow – EVs – will likely rise.
Current EVs that get affordable batteries from China will be made more expensive, or will need to find new suppliers which can now charge higher prices since they don’t have to compete with the previously lowest-priced option.
And same with EVs as a whole – the existence of excellent small cars like the EX30 exerts downward price pressure on competing vehicles, which now won’t have to worry about that particular car (or any other affordable EVs which might make their way here) as competition.
And the net effect of that is lower EV adoption – which means Americans won’t get cleaner air as quickly as we would otherwise.
Meanwhile, while it may give a little breathing room for the American auto industry to catch up, it may also make them think they don’t need to work as hard to do so. American automakers already lobby to slow down the EV transition, so it’s clear they aren’t interested in moving as fast as they possibly can.
But most importantly, I don’t see how artificially raising the prices of EVs helps to meet climate goals. Climate change is the most important issue humanity has ever faced, and needs to be priority number one of every human on Earth. This decision does not do that.
Of course, despite this being a bad move, there aren’t many other options. President Biden’s election competitor, Mr. Trump, also favors increased tariffs, though is less targeted in his approach.
So there is still a clear better choice for how to handle the issue of the EV trade – even if both seem committed to making some poor decisions on the way.
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In a joint statement, French and German economists have called on governments to adopt “a common approach” to decarbonize European trucking fleets – and they’re calling for a focus on fully electric trucks, not hydrogen.
France and Germany are the two largest economies in the EU, and they share similar challenges when it comes to freight decarbonization. The two countries also share a border, and the traffic between the two nations generates major cross-border flows that create common externalities between the two countries.
And for once, it seems like rail isn’t a viable option:
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While rail remains competitive mainly for heavy, homogeneous goods over long distances. Most freight in Europe is indeed transported over distances of less than 200 km and involves consignment weights of up to 30 tonnes (GCEE, 2024) In most such cases, transportation by rail instead of truck is not possible or not competitive. Moreover, taking into account the goods currently transported in intermodal transport units over distances of more than 300 km, the modal shift potential from road to rail would be only 6% in Germany and less than 2% in France.
That leaves trucks – and, while numerous government incentives currently exist to promote the parallel development of both hydrogen and battery electric vehicle infrastructures, the study is clear in picking a winner.
“Policies should focus on battery-electric trucks (BET) as these represent the most mature and market-ready technology for road freight transport,” reads the the FGCEE statement. “Hence, to ramp-up usage of BET public funding should be used to accelerate the roll-out of fast-charging networks along major corridors and in private depots.”
The appeal was signed by the co-chair of the advisory body on the German side is the chairwoman of the German Council of Economic Experts, Monika Schnitzer. Camille Landais co-chairs the French side. On the German side, the appeal was signed by four of the five experts; Nuremberg-based energy economist Veronika Grimm (who also sits on the National Hydrogen Council, which is committed to promoting H2 trucks and filling stations) did not sign.
With companies like Volvo and Renault and now Mercedes racking up millions of miles on their respective battery electric semi truck fleets, it’s no longer even close. EV is the way.
On today’s tariff-tastic episode of Quick Charge, we’ve got tariffs! Big ones, small ones, crazy ones, and fake ones – but whether or not you agree with the Trump tariffs coming into effect tomorrow, one thing is absolutely certain: they are going to change the price you pay for your next car … and that price won’t be going down!
Everyone’s got questions about what these tariffs are going to mean for their next car buying experience, but this is a bigger question, since nearly every industry in the US uses cars and trucks to move their people and products – and when their costs go up, so do yours.
New episodes of Quick Charge are recorded, usually, Monday through Thursday (and sometimes Sunday). We’ll be posting bonus audio content from time to time as well, so be sure to follow and subscribe so you don’t miss a minute of Electrek’s high-voltage daily news.
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GE Vernova has produced over half the turbines needed for SunZia Wind, which will be the largest wind farm in the Western Hemisphere when it comes online in 2026.
GE Vernova has manufactured enough turbines at its Pensacola, Florida, factory to supply over 1.2 gigawatts (GW) of the turbines needed for the $5 billion, 2.4 GW SunZia Wind, a project milestone. The wind farm will be sited in Lincoln, Torrance, and San Miguel counties in New Mexico.
At a ribbon-cutting event for Pensacola’s new customer experience center, GE Vernova CEO Scott Strazik noted that since 2023, the company has invested around $70 million in the Pensacola factory.
The Pensacola investments are part of the announcement GE Vernova made in January that it will invest nearly $600 million in its US factories and facilities over the next two years to help meet the surging electricity demands globally. GE Vernova says it’s expecting its investments to create more than 1,500 new US jobs.
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Vic Abate, CEO of GE Vernova Wind, said, “Our dedicated employees in Pensacola are working to address increasing energy demands for the US. The workhorse turbines manufactured at this world-class factory are engineered for reliability and scalability, ensuring our customers can meet growing energy demand.”
SunZia Wind and Transmission will create US history’s largest clean energy infrastructure project.
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