The U.S. is ready to shake up the global EV markets with rumored plans to quadruple the current tariffs on China-made electric vehicles. The government is ready to announce the new tariffs as early as this coming Tuesday, with the potential for Chinese EV prices to double almost overnight.
Not Only Electric Vehicles
The news follows widespread consensus that tariffs on various Chinese goods are coming. The White House is considering taxing solar panels, batteries, and even medical supplies, but the tariffs on EVs are stealing the spotlight, with an increase from the current 25% to an eye-watering 100%.
At the moment, any vehicle imported from China to the U.S. attracts a 27.5% tariff. This already caused massive problems for Chinese automakers and is why we don’t see many Chinese cars on our roads. It was enough for Chinese companies to divert their focus to other markets.
China Wants A Bigger Slice Of The EV Pie
It turns out that having a foothold in many global auto markets isn’t enough for the fast-growing Chinese EV industry. They have been eyeing the U.S. market for a while and teasing us with their irresistibly affordable electric vehicles. Even with the current tariffs, their cars would be cheaper than those from American brands.
Enter President Biden, who seems determined to keep those Chinese EVs at bay. If all the rumors hold true, he’s about to raise the tariff to a jaw-dropping 100%, essentially doubling the price of any Chinese EV entering the U.S. market. This isn’t Biden’s first jab at the Chinese auto industry either. The recent updates to the coveted EV tax credit include provisions that make it much harder for China-sourced EVs to qualify.
China Is Far Ahead
Why are the Chinese EVs getting sudden attention? Looking back only nine years, the share of electric cars in the Chinese market was a measly 0.84%. For comparison, in 2015, the U.S. EV market share stood at 0.66%. Fast-forward to 2023, and the Chinese EV market has skyrocketed to 37%, leaving competitors in the dust.
Chinese automakers are churning out EVs faster than we can count. They are building a fleet of dedicated giant sea transporters because there aren’t enough of them already to keep up with the demand. While those EVs are heading for Europe and other markets, if the tariffs become a reality, it is highly unlikely for American consumers to get their hands on cheap electric cars any time soon.
If you are an EV enthusiast, prepare for a bit of a shock. On the other hand, there are plenty of options out there, and who knows, this whole tariff situation will give American automakers a chance to shine.