Steep tariffs may block Chinese threats to Michigan’s growing EV industry

China is undermining U.S. supply chains “by flooding the market with artificially cheap products that hurt American businesses and workers,” Raimondo added.

Central to the ruling, however, are electric vehicles. While Chinese automakers are growing their global market share of EVs, U.S. manufacturers are investing billions to shift to the new technology even as the pace of consumer sales slows.

So far, only Polestar is importing EVs from China, and it plans to open a U.S. factory this year. Another Geely brand, Lotus, recently started taking orders for its luxury electric SUV made in China, Edmunds reports.

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But auto industry experts agree that China eventually will turn to the U.S. for EV sales, notably as Chinese manufacturers deal with overproduction. Yet those vehicles, due to government subsidies, are selling for as little as $10,000. 

The switch from gas-fueled autos already leaves U.S.-based automakers — including Michigan’s Ford Motor Co. and General Motors, which lose money on each EV sale — vulnerable to lower prices set by Chinese automakers. 

Tariffs on EVs will increase this year from 25% to 100%, with hikes to 25% planned for lithium-ion EV batteries, battery materials and critical minerals.

“We’ve got to make sure we’re competing on a level playing field,” U.S. Rep. Debbie Dingell, D-Ann Arbor, told Bridge Michigan on Tuesday after leaving a White House presentation by Biden. “And we‘ve got to keep our state strong.”

The price-leveling policy change comes as Michigan is spending billions to attract clean-energy business. Beyond over $2 billion committed to major EV battery factories, hundreds of millions more in grants, infrastructure and worker training has been promised to companies like Lucid Motors, Calumet Electronics, Corning and SK Siltron to increase clean-energy related production.

Still, Chinese EVs account for 60% of global market share. China also controls as much as 80% of the EV battery supply chain, the White House estimated.

“The Communist government is subsidizing those vehicles,” Dingell said. “They don’t pay their workers. They don’t have environmental standards. They don’t have labor standards. They don’t have occupational safety standards.

“We cannot let China shut us out of the market.”

Tariffs against Chinese products from autos to baseball hats were initiated in 2018 by then-President Donald Trump under a rule allowing the move when U.S. trade is restricted. The tariffs were set to expire this month, after several renewals while they were reviewed.

During the pandemic — notably amid shortages of electronic chips, medical supplies and consumer products — the Biden administration initiated vast programs to increase U.S. manufacturing of those products, while also increasing EV production to meet climate goals. 

The initiatives include: The Inflation Reduction Act’s $369 billion for climate-focused changes, including promoting EVs; $53 billion in the CHIPS and Science Act to boost semiconductor manufacturing; and the Bipartisan Infrastructure Law, which also funds an EV boost. 

Chinese-induced pricing pressures are facing heightened political scrutiny as Biden is expected to face Trump in the 2024 presidential election.

Trump has called for steeper tariffs, and on Tuesday said that more products should be under tariff protection and that Biden’s administration “should have done it a long time ago.”

While both presidential candidates now support tariffs on Chinese EVs and other goods, some criticize them as expensive for American businesses and consumers. 

Beyond free trade, national security also is a concern when it comes to U.S.-China relations. 

With the tariffs, Biden “wisely followed President Trump’s call to levy tariffs,” said Joseph Cella, a former U.S. diplomat from Michigan who is critical of state policies involving Chinese businesses. 

Deals with Chinese companies need more scrutiny to expose any Chinese Communist Party ties, Cella said, since they have the potential of “imperiling our national and economic security.”

Several members of Congress — including Dingell and Michigan Democratic Reps. Dan Kildee, Elissa Slotkin, Shri Thanedar and Haley Stevens — sent a letter to Raimondo, the U.S. commerce secretary, in April urging her to adopt steeper tariffs. They, too, raised national security concerns. 

“The  implications of the Chinese automotive industry’s exponential growth extend beyond economic considerations, encompassing broader national security concerns,” the lawmakers wrote. “CCP-backed initiatives are aimed at achieving global market dominance.”

Beyond EVs

Other tariffs set by Biden’s action, according to the White House: 

Semiconductors: The tariff rate on semiconductors will increase from 25% to 50% by 2025.

Solar cells: The tariff on solar cells (either assembled into modules or not) will increase from 25% to 50% in 2024.

Steel and aluminum: The tariff rate on certain steel and aluminum products under Section 301 will increase from 0–7.5% to 25% in 2024.

Ship-to-shore cranes: The tariff rate on port cranes will increase from zero to 25% in 2024.

Syringes and needles:  The tariff rates will increase from zero to 50% in 2024. 

Personal protective equipment (PPE): Certain products, including some respirators and face masks, will see tariffs go from 0-7.5% to 25% in 2024. 

Rubber medical and surgical gloves: Tariffs will increase from 7.5% to 25% in 2026.

“China’s policies in the legacy semiconductor sector have led to growing market share and rapid capacity expansion that risks driving out investment by market-driven firms,” the White House said. 

The White House described steel as a “vital sector for the American economy. 

The industry has a longstanding place in the U.S., contracting in the 1970s and leaving behind mills across the Midwest, including towns like Detroit, Trenton and Albion in Michigan.