In a recent announcement, the U.S. government unveiled plans to significantly increase import duties on electric vehicles (EVs) and other goods from China, sparking escalating trade tensions between the two economic giants. The Office of the U.S. Trade Representative revealed that the tariff hikes are scheduled to take effect on August 1, 2024.
U.S. Trade Representative Katherine Tai outlined the timeline, stating that a 30-day public comment period would commence, concluding on June 28. During this period, feedback on the potential impact of the proposed tariff increases on the U.S. economy will be solicited and analyzed. Subsequently, the new tariffs are set to be implemented on August 1.
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The proposed tariff adjustments include quadrupling tariffs on Chinese EVs from 25% to 100%, along with raising the duty rate on lithium-ion batteries for EVs or individual battery components from 7.5% to 25%. Starting January 1, 2026, a new duty rate of 25% will also be imposed on natural graphite, permanent magnets, and potentially other critical materials.
These measures, which target products in sectors where the U.S. has recently made significant investments or those earmarked by China for dominance, are estimated to impact Chinese goods worth $18 billion. However, this figure includes all types of batteries, not solely those for electric vehicles.
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Despite the substantial tariff increase on Chinese EVs, analysts suggest that its practical impact may be limited, given the minimal importation of Chinese electric vehicles due to existing tariffs.
In parallel, U.S. Treasury Secretary Janet Yellen expressed intentions to rally G7 allies to jointly address China’s industrial policies at the current finance ministers meeting in Italy. This effort aims to establish a unified stance rather than a direct replication of U.S. tariffs.
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Moreover, the Chinese Chamber of Commerce in Brussels has cautioned of potential retaliatory measures by Beijing in response to punitive tariffs on Chinese EVs. While import duties of up to 25% are being considered, they are not directed at electric cars but rather at certain combustion engines from the EU and the U.S.
