The President of the United States, Joe Biden in his plan to increase the tariff rate by four times on Chinese electric vehicles (EV) will be implemented to avoid the threat of Chinese car dumping in the US car sales market.
The 100% tariff announced last Tuesday was increased from the current import tax of about 25% covering EVs imported from China.
However, it can still give an opportunity to cheaper models by reducing the domestic price and covering the weakness of imports made by its manufacturers in other countries.
Automotive and trade experts argue that the tariff increase is a short-term protectionist measure that slows down the problem but that it will not stop Chinese EV carmakers from selling in the US.
AlixPartners Head of Automotive, Dan Hearsch said China's EV technology will dominate the market and it will not be avoided.
Western EV car makers and suppliers should step up their 'game' and be prepared to accept this decision. Either to give up or move on.
Meanwhile, EV tariffs including other increases such as battery materials are among the new tariffs on Chinese imports worth $18 billion.
For decades, Chinese companies have had difficulty selling their vehicle brands in the US for safety and technology reasons.
However, the quality of Chinese cars has improved significantly in recent years because the government has channeled subsidies to expand domestic production. That increase has led to a rapid decline in the marketing department in the United States.
Chinese companies took 8% of their EV car sales in Europe in September and could increase that to 15% by 2025. The European Union believes China will cut the price of its local models by about 20%.
The action from Biden will force Chinese companies to move faster in establishing local production operations or move joint ventures with other companies to reduce export costs.
