On Tuesday, U.S. President Joe Biden quadrupled tariffs on Chinese electric vehicles in a move to “protect” American workers and shore up votes as the U.S. presidential election — now just 173 days away — draws ever closer, and candidates tout ‘tough-on-China' trade policies.
Biden also announced new or increased levies on Chinese products including semiconductors and solar equipment, encompassing US$18-billion worth of imports. In 2023, the U.S. imported US$427 billion in goods from China.
Biden hiked tariffs on Chinese EVs from 25 per cent to 100 per cent. Not to be outdone, former U.S. president Donald Trump, now the presumptive Republican presidential candidate, said that, if re-elected, he would impose a 200 per cent tariff on Chinese EVs made in Mexico.
China lays claim to a miniscule fraction of the American EV market. But U.S. lawmakers and lobby groups are worried that subsidized Chinese companies such as BYD — which recently released a compact EV model retailing at just US$10,000 — could “flood” the U.S. market. In the U.S., the average cost of a (larger) EV is US$52,000.
BYD plans to open a Mexico plant in the next three years, which could allow the carmaker, under CUSMA, to circumvent Biden’s tariffs.
Ottawa’s EV dilemma?
Ottawa has so far opted against explicit tariffs, although a 6.1 per cent levy on EVs produced outside the U.S. and Mexico applies to China. Long-standing non-tariff barriers have also frozen Beijing out of Canadian markets.
But by 2035, Ottawa wants all new light-duty vehicles sold in Canada to be zero-emission vehicles (ZEVs). Last year, 11.9 per cent of light-duty vehicles sold in Canada were ZEVs. One analyst told CBC News in January that Chinese manufacturers may end up helping to bridge that gap.
China hasn’t gained a foothold in the Canadian auto market, and recent investments in Canada’s EV supply chain — including a C$15-billion investment by Honda — may reduce costs for consumers. But, in time, China’s cheaper EVs may pose a problem for the Canadian industry.
Beijing, Washington talk AI risks
The U.S. and China will look to leave EVs in the rear-view mirror this week in Geneva, where inaugural high-level talks on regulating artificial intelligence will take place.
A joint statement — or co-operation on AI — is unlikely. Instead, the talks will allow both sides to discuss the risks of AI, specifically "advanced systems,” according to one U.S. official.
In November 2023, Biden and Chinese President Xi Jinping met in California, where they agreed to establish this week’s recurring AI talks, resume military-to-military communication, and crack down on companies responsible for fentanyl precursors.
