Introduction:
It is a well-known fact that China is famous for cheap goods, and by manufacturing any goods cheaply, China sells its goods all over the world and is weakening the economy of the whole world.
To maintain its reputation in the field of electric vehicles, China is selling cheap cars all over the world. Because of this, American President Joe Biden has proposed a 100% tax on Chinese cars. This step is to protect the US carmakers from cheap imports.
As per the sources, this is a preventive measure to stop the flood of Chinese goods in the U.S. market. A four-year review will follow this.
Range of Tariff on Electric Vehicles & Others:
On electric vehicles, the tariff will increase from 25% to 100%, a tax increase from 7.5%to 25% will be on lithium batteries, a 0 (zero) to 25% rise on critical minerals, and 25% to 50%, and 25% to 50% on Semiconductors.
U.S. President Joe Biden said that the increased tax is a proportionate response to China’s overloading capacity of the electric vehicle sector. As per the record, china produces 30m electric vehicles every year but manages a domestic sale of only 22m to 23m.
The new tariffs will kick in after 90 days– a period that will be closely watched for signs of tit-for-tat retaliation by China. White House sources said the aim was not to escalate trade tensions but to help parts of the US economy where there had been a cycle of disinvestment.
Beginning this year, all lithium-ion EV batteries from China will be subject to a 25% import duty.
According to Reuters, Chinese electric vehicle manufacturers have benefitted from $57 billion in government subsidies between 2016 and 2022, leading to an overproduction of Electric Vehicles, creating artificially low pricing that could choke out global competitors.
China’s response:
In response, China’s state spokesperson news outlet published an editorial, accusing the US of “discouraging fair trade and environmental protection”, while saying that US consumers would endure the most of the tariffs.
“Unfortunately, the United States is a country that advertises open economy and free trade, but its actions are against its words. It also promises that it does not seek to decouple from China and hinder China’s development, but its practices tell another story,”
Biden’s Reply:
Biden said he was “not looking for a fight with China” but that the US needed to stand up to China’s “unfair economic practices and industrial overcapacity”. “I’m looking for competition, but fair competition,” he said.
U.S. politicians and manufacturers already see Chinese Electric Vehicles as a serious threat.
Biden said, “My administration is combining investments in America with tariffs that are strategic and targeted. It’s a smart approach,”
The administration will also double tariffs on Chinese solar cell imports to 50%, a move meant to counter China’s dominance of solar production, which currently comprises about 70% of the global market.
The Biden administration says the move is an effort to protect American workers against unfair Chinese trade practices.“Bottom line, I want fair competition with China, not conflict,” Biden said. “And we’re in a stronger position to win that economic competition in the 21st century against China than anyone else because we’re investing in America again.”
Conclusions:
This is a very normal thing that any country to adopt whatever rules and regulations are possible to strengthen its economy and to grow and protect its manufacturing sector and tries to grow its economy. America is a strong country. Whatever appropriate rules it takes to counter China’s unfair trade policy and sell cheap and low-quality products in its country, it is a successful policy.
