US Treasury Secretary Janet Yellen has highlighted the Biden administration’s commitment to bolstering the domestic electric vehicle (EV) industry amidst increasing competition from China and substantial government subsidies.
Addressing concerns
During her visit to a new battery materials plant in Kentucky, Yellen responded to questions regarding the need for new tariffs on Chinese EVs. She emphasised President Biden’s dedication to ensuring the success of the domestic industry.
Rising competition from China
As China expands its exports of EVs globally, concerns have emerged in Washington regarding potential adverse effects on US automakers. China’s surplus capacity in steel and aluminium has previously impacted US metals producers.
Tariffs and export Dynamics
Current tariffs of 25% on all Chinese vehicles, imposed by former President Donald Trump, effectively restrict Chinese EVs from entering the US market. However, leading Chinese manufacturer BYD has begun exporting to Mexico and is considering establishing a factory there.
Calls for action
Some US senators have urged the Biden administration to impose higher tariffs on Chinese EVs to safeguard domestic interests. The US Commerce Department has initiated an investigation into whether Chinese vehicle imports pose national security risks.
Review of trade policies
The US Trade Representative’s office is conducting a review of tariffs imposed by the Trump administration on Chinese imports. This review could lead to further restrictions on Chinese EVs, in addition to conventional vehicles.
Strategic tariffs
Yellen and other administration officials advocate for a strategic approach to tariffs, aiming to protect vital industries while mitigating costs elsewhere. This strategic stance aligns with efforts to bolster the US economy and enhance national security.
Promoting domestic industry
Yellen highlighted the significance of the 2022 Inflation Reduction Act in promoting clean energy incentives and reducing reliance on Chinese supply chains for batteries and related components.
Regulatory measures
Provisions such as “foreign entity of concern” rules aim to limit the inclusion of Chinese content in US-made EVs to qualify for consumer tax credits. This measure seeks to maintain the competitiveness of domestically produced vehicles.
Balancing objectives
Yellen underscored the administration’s approach to balancing climate goals with economic considerations, ensuring meaningful participation in industries crucial for driving the US economy forward.
Janet Yellen’s remarks reflect the Biden administration’s proactive stance towards safeguarding the domestic EV industry amidst growing global competition and geopolitical complexities.