The United States just took the war against Chinese electric vehicles to the extreme: 100% tariffs.

The Biden administration has quadrupled the 25% cap on electric vehicle imports.

The United States is considering taking “extreme measures” against Chinese electric vehicles. Imposing even more restrictive sanctions or marketing bans were some of the signs that were left behind in statements Reuters received last week from Gina Reimondo, the U.S. Commerce Secretary.

Just a week later, the country proposed new tariffs of up to 100% on this type of Chinese vehicle, a measure aimed at protecting the American auto industry and continuing the trade war with the Asian country.

The mother of all tariffs. Joe Biden announced impressive increases in US tariffs on imports of electric vehicles, batteries, solar panels and minerals. Currently, the maximum tariffs are 25%, and after the increase this figure will sharply increase to 100%.

The measure was taken as a preventative measure to prevent Chinese electric vehicles from flooding the American market, stifling the growth of the domestic industry.

Taxes increase from 25% to 100% in the case of electric vehicles, from 7.5% to 25% on lithium batteries, from 0 to 25% on critical minerals for the production of components, from 25% to 50% on solar cells and also from 25% to 50% in case of semiconductors.

“Proportional” response. The Biden administration appears unconcerned about possible retaliation from the Chinese government. According to The Guardian, the US insists that this is nothing more than a proportionate response to China’s excess capacity in the electric vehicle sector.

“China is producing at a rate and trajectory that far exceeds any plausible estimate of global demand.” Statements from senior Biden administration officials compiled by CNBC.

In fact, China’s electric vehicle production capacity is so large that it is now in surplus. A surplus that he is trying to export to Europe as quickly as possible and where he wants to win a price war.

Despite the American position, the reality is that Chinese EV sales have already been crippled by high tariffs imposed by the previous Trump administration. With this move, the United States ensures that it can avoid future threats. The Alliance for American Manufacturing itself has said that bringing a Chinese EV to market would be an “extinction level event.”

National Security Risk. The United States has not hesitated to ban Chinese technology for “national security reasons.” This was one of the reasons why Huawei can no longer cooperate with Google, and one of its assets is to continue to impose increasingly strict sanctions on China.

“They collect large amounts of sensitive data about their drivers and passengers and regularly use their cameras and sensors to record detailed information about American infrastructure.”

In early March, the Commerce Department expressed concerns about the inherent risks posed by Chinese cars. Cause? The amount of data these vehicles can collect about a country’s own infrastructure.

Little will change in the market. This measure will serve as a deterrent against possible new Chinese electric vehicles at a low price. As for the current sales picture in the US, little or nothing will change. Tesla Model Y, Model 3, Chevrolet Bolt, Ford Mustang Match-E and Volkswagen ID.4 top the list, which does not include a single Chinese car.

According to the administration, there will also be risks associated with the possible inflationary impact of this measure. The Biden government argues that these tariffs “will not have any inflationary impact” because they are not “pass-through” to the economy and only affect a specific sector.

Image | Hataka and Juan Domenech

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