Will a US tariff hike on Chinese EVs keep them out?

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Three Senate Democrats from car-manufacturing states on Thursday urged the Biden administration to increase tariffs on Chinese EVs, bringing bipartisan pressure to dissuade Chinese automakers from selling their products to the U.S.

In a letter first reported by Reuters, Senators Gary Peters and Debbie Stabenow of Michigan and Sherrod Brown of Ohio warned of “artificially low-priced Chinese EVs flooding the U.S. market,” which would “endanger the survival of the U.S. automobile industry as a whole.”

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The Biden administration reportedly considered hiking tariffs on Chinese EVs above the current 25% in December. And last week the Commerce Department opened an investigation on whether Chinese cars pose a risk to national security. But lawmakers want more action.

The letter from Democrats came just days after Republican Senator Josh Hawley of Missouri proposed a bill that would raise the base tariff rate on Chinese cars 100% from the current 2.5%, effectively putting a 125% tariff on imported Chinese vehicles, Reuters reported in a separate article. It also seeks to apply a 100% tariff to vehicles assembled in Mexico by China-based automakers.

BYD Seal

BYD Seal

The latter stipulation would close a potential loophole by which Chinese automakers could enter the U.S. market by importing cars from Mexico. BYD, for example, is reportedly considering a Mexico plant.

Mexico already builds many U.S.-bound EVs—but few of these models stay there. But it’s also seen as a beachhead for Chinese automakers seeking to enter the North American market. BYD has started selling EVs like its Seal in Mexico—although it’s made clear it has no plans to sell them in the U.S.

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