US dials up taxes on Chinese EVs, critical minerals imports

The United States is putting pressure on China to stop its “unfair trade practices” by increasing tariffs on billions of dollars worth of Chinese imports, including electric vehicles, batteries, and critical minerals.

The increase in tariffs, which were announced earlier this week by President Joe Biden, follows a review by the United States Trade Representative and will impact US$18 billion worth of imports from China.

This includes steel and aluminum, semiconductors, electric vehicles (EVs), batteries, critical minerals, solar cells, ship-to-shore cranes, and medical products.

China currently dominates global trade in EVs, lithium-ion batteries and solar photovoltaic. The Asian powerhouse accounts for 68% of the EVs produced, 74% of lithium-ion battery production and 86% of solar modules made, according to Griffith University.   

In 2023, China’s EV exports rose 64% to around 1.55 million vehicles compared to 2022. 

To try and break the country’s stranglehold on these markets, Biden’s shake-up of Chinese import tariffs will see electric vehicles rise fourfold to 100%, while lithium-ion batteries, components and parts will more than triple to 25% this year.

Graphite and permanent magnets, which previously did not attract any import duties, will now be subject to a 25% tax starting in 2026 and other critical minerals will also now be taxed at a rate of 25% from this year. 

The White House says China currently controls over 80% of certain segments of the electric vehicle battery supply chain, particularly on the upstream front — such as critical minerals mining, processing, and refining. 

The tariffs on steel and aluminium will rise to 15%, up from 0-7.5%, this year while solar cells and semiconductors will double to 50% in 2024 and 2025, respectively. 

A 25% tariff will also be introduced on ship-to-shore cranes, and various medical products will attract higher tariffs of between 25% and 50% starting in 2024 and 2026 depending on the product. 

The White House says the higher tariffs are to “encourage China to eliminate its unfair trade practices regarding technology transfer, intellectual property, and innovation”

“China’s forced technology transfers and intellectual property theft have contributed to its control of 70, 80, and even 90% of global production for the critical inputs necessary for our technologies, infrastructure, energy, and health care—creating unacceptable risks to America’s supply chains and economic security.”

According to the US Census Bureau, March 2024 imports totalling $29.8 billion from China were the lowest since March 2020 ($19.6 billion). In 2023, the United States imported $427 billion worth of goods from China.

China has firmly opposed the further increase in tariffs, with the Chinese Ministry of Commerce saying in a statement following the news that it will “take resolute measures to safeguard its own rights and interests”.

“China is strongly dissatisfied with the US abuse of the Section 301 tariff review procedure driven by domestic political concerns and its increase of additional tariffs on certain Chinese products.

According to the ministry, the World Trade Organization (WTO) has already ruled that the Section 301 tariffs are in violation of WTO regulations.

The Biden Administration previously committed $860 billion to incentivise EV, clean energy and semiconductor industries as part of its Investing in America agenda.

Write to Angela East at Mining.com.au 

Images: Unsplash
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Written By Angela East
Managing Editor Angela East is an experienced business journalist and editor with over 15 years spent covering the resources and construction sectors and more recently working as a communications specialist handling media relations for junior resources companies.