Largest Tariff Surge For China

Todd Moses
May 13, 2024

The Biden administration plans to raise tariffs on electric vehicles and other clean energy goods from China next week.

Inputs that matter: Chinese electric vehicles currently face a 25% tariff, and the administration is expected to raise that as much as 100% to make it more expensive to buy the product from China.

  • The new tariffs are not expected to include traditional gasoline-powered cars that are made in China.
  • These tariffs are also expected to include new levies on semiconductors, which Biden has worked to boost domestically.
  • They also said that a rate hike would apply to Chinese batteries and solar panels — two areas in which the Biden administration has invested domestically.

The opportunity: To circumvent the tariffs, companies such as Ford, GM, and Tesla are creating domestic battery plants by partnering with Chinese companies.

  • Norway, with 79.6%, Iceland, 58.4%, and Denmark, 44.9%, are the leading EV countries.
  • China has 23.8% EV adoption, and the U.S. comes in at 8.1%.

Zoom in: Sen. Sherrod Brown (R-OH), the Banking Committee chairman, has called on the Biden administration to ban Chinese electric vehicles completely due to privacy concerns about people's data.

  • GlobalFleet reports, "While Ford generated huge profits in 2023, the company's E.V. segment reported a $4.5 billion loss, and GM is not expecting earnings in the E.V. segment until 2025."
  • GM postponed opening its second electric truck plant in Michigan to 2025.

Between the lines: Meanwhile, in Germany, activists began protesting an expansion of a Tesla plant in the city of Grünheide on the outskirts of the German capital, Berlin, on Wednesday, loudly voicing concern over the environmental impact the expansion could have due to the need to clear a large swath of forest for construction.

  • Another point of contention is the factory's massive use of public water supplies for production.

Follow the money: Tesla is the largest seller of carbon credits in California.

  • Since 2009, the automaker has made over $9 billion from carbon credit sales.
  • In 2023, Tesla generated $1.79 billion in regulatory credit revenue.
  • These credits are sold to their fossil fuel competitors.

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