US delays special tariffs on China-made EVs

The US special tariffs on electric cars were supposed to come into force on 1 August. However, it now says it will issue a final determination this month and that the tariffs will be effective approximately two weeks later. The reason for the delay: paperwork.

According to the Office of the US Trade Representative (USTR), it is still reviewing more than 1,100 comments it received regarding the upcoming tariffs. Only after it has reviewed them can it offer its final decision. The modifications will take effect approximately two weeks later, so they will probably still apply before the fourth quarter of 2024.

Washington announced at the end of May that it would quadruple tariffs on electric cars imported from China, raising them from 25 to 100 per cent. It also increased import duties for other products from China, including lithium-ion batteries. The duty rate for the latter will increase from 7.5 to 25 per cent.

As Reuters points out, the “EV figure may have more political than practical impact in the US,” as the country imports very few electric vehicles from China. However, lithium-ion batteries make up the majority of imported goods affected, accounting for 13.2 billion dollars of the 18 billion dollars worth of Chinese goods subject to tariff hikes.

However, the US also has other measures in place to ensure that raw materials and components for i.e. electric cars come from the US or a country with which Washington has a free trade agreement. The Inflation Reduction Act (IRA) states that, for instance, 40 per cent of the battery’s critical minerals must be extracted, processed or recovered there. Otherwise, the vehicle will not qualify for the US tax credit, making it less appealing to buyers.

ustr.gov, reuters.com