US to raise tariffs on electric vehicles, chips imported from China

The White House today announced plans to significantly raise tariffs on a variety of goods from China including electric vehicles, chips and batteries.

The increased levies are expected to affect $18 billion worth of annual imports. Some of the new duties are set to go into effect this year, while others will start applying to the affected goods in 2025 and 2026.

“China’s unfair trade practices concerning technology transfer, intellectual property, and innovation are threatening American businesses and workers,” the White House said in a statement. “In response to China’s unfair trade practices and to counteract the resulting harms, today, President Biden is directing his Trade Representative to increase tariffs under Section 301 of the Trade Act of 1974 on $18 billion of imports from China to protect American workers and businesses.”

Electric vehicles are a major focus of the Biden administration’s new tariff package. Duties on EVs imported from China will quadruple to 100% this year, the White House stated today, while the current 7.5% tariff rate on lithium-ion EV batteries will more than triple.

The move also affects a range of other energy storage technologies and components. That includes lithium-ion batteries made for use in systems other than EVs, which will be subject to a 25% tariff instead of today’s 7.5% rate. The duties on natural graphite, a material essential to battery manufacturing, and “certain other critical minerals” will go up to the same percentage.

The White House is also placing a 25% tariff on permanent magnets, or magnets that retain their ability to attract metals even when they’re not subject to an electric current. Materials with this property power the generators that wind turbines use to turn kinetic energy into electricity. Permanent magnets can also be found in a range of other systems including electric vehicle motors, speakers and the actuators that some industrial robots use to move.

Duties on chips imported from China are also set to rise. In today’s announcement of the move, the White House detailed that China is expected to account for nearly half of all the new manufacturing capacity coming online within certain segments of the legacy semiconductor market. Legacy semiconductors are chips that aren’t made using the newest manufacturing technologies on the market. The Biden administrator is doubling tariffs on chips from China to 50%.

New or increased duties will also be applied to a range of other goods. Solar cells, the electricity-generating building blocks of solar panels, will be subject to a 50% traffic starting later this year if they’re imported from China. Duties will likewise be raised on certain steel and aluminum products, some types of medical equipment and the specialized cranes that are used at ports to unload cargo ships.

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