US special tariffs on EVs from China to take effect in August

A few days ago, the US government announced a massive increase in import duties on electric vehicles and other products from China. It is now also clear when these will apply. According to the Office of the US Trade Representative, the tariff increases are planned for 1 August 2024.

Specifically, US Trade Representative Katherine Tai announced that her office will initially set up a 30-day period for public comments, which will end on 28 June. During this period, comments on the impact of the proposed tariff increases on the US economy will be collected and subsequently analysed. The new tariffs themselves will come into force on 1 August.

As reported, tariffs for Chinese EVs in the US will be quadrupled from 25 per cent to 100 per cent. The duty rate for lithium-ion batteries for use in electric vehicles or individual battery components will also increase from 7.5 to 25 per cent on 1 August. On 1 January 2026, a new duty rate of 25 per cent will also apply to natural graphite, permanent magnets and, from as early as 2024, to certain other critical materials. All that will affect the electric mobility sector, and the US is also introducing a number of other special tariffs in other key areas. The proposed tariff increases affect “products targeted by China for dominance, or are products in sectors where the United States has recently made significant investments,” summarises the Office of the Trade Representative.

The scope of the measures is now also made clear in the office’s announcement: the tariff increases affect imported Chinese goods worth 18 billion dollars. According to the US Census Bureau, lithium-ion batteries will make up the majority of this, accounting for 13.2 billion dollars of imports from China in 2023. However, this includes all types of batteries, not just those for electric vehicles.

According to Reuters, the massive tariff increase on EVs from China is likely to have “more political than practical impact.” Given the existing tariffs, only a few Chinese electric vehicles have already been imported.

The news agency also reports that US Treasury Secretary Janet Yellen has announced her intention to urge the G7 allies to take joint action against China’s industrial policy at the current meeting of finance ministers in Italy. This should be less about similarly adopting US tariffs and more about finding a common stance. The G7 includes the US, Japan, Germany, France, the UK, Italy and Canada. As is well known, the EU is currently examining the introduction of punitive tariffs on EVs from China as part of an anti-dumping investigation. However, a tariff of 30 per cent is more likely.

Meanwhile, the Chinese Chamber of Commerce in Brussels warns of possible countermeasures by Beijing in response to punitive tariffs on Chinese EVs. Import duties of up to 25 per cent are apparently on the cards – but not on electric cars, but on certain combustion engines from the EU and the US.

reuters.com, ustr.gov (PDF, p. 6 and 7)