Biden's Tariff Hike on Chinese EVs Sparks Strategic Response
President Biden's recent announcement of increased tariffs on Chinese electric vehicles (EVs) and related batteries has sparked a strategic response from Chinese companies like NIO and BYD, while US carmakers and suppliers assess the potential impact on their supply chains.
The proposed tariff hikes, from 7.5% to 25% on lithium batteries and other parts, and from 25% to 100% on battery EVs, totaling 102.5%, have prompted Chinese companies to explore cost-cutting measures. NIO, for instance, is collaborating with battery manufacturer CATL and considering sourcing from competitors like BYD to mitigate the tariff impact.
President Biden, in his White House speech on May 14, emphasized the need for fair competition and American-made EVs. He criticized China for subsidizing industries, driving out competitors, and flooding markets with cheap products. The Motor and Equipment Manufacturers Association (Mema) supports the updated Section 301 tariffs, expecting them to reduce dependency on foreign sources and foster greater localization.
Brian Gu, co-president of Xpeng, expressed concern that the tariffs would hinder the achievement of carbon neutrality and green energy transition. China's Ministry of Commerce, however, has threatened resolute measures to safeguard its interests, urging the US to cancel additional tariff measures.
The planned US tariff increases on Chinese EVs and batteries have prompted strategic responses from Chinese companies and critical assessments from US carmakers and suppliers. While the US aims to foster domestic EV production and fair competition, China has vowed to protect its interests, setting the stage for potential trade tensions.
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