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Trade war ramps up as US quadruples tariffs for Chinese-made cars

The United States have quadrupled tariffs on Chinese-made electric cars, in a move that may impact vehicles sold by all manufacturers.

The United States has quadrupled tariffs on Chinese-made electric cars, in a move that may impact vehicles sold by all manufacturers.

The US Government has quadrupled its tariff on Chinese-made electric vehicles from 25 to 100 per cent. The move is claimed to be in response to “unfair trade practices” and “artificially low-priced” exports.

The latest in unfolding trade tensions may have only a limited affect on the current low rate of sales of Chinese made EVs in the US.

However it remains to be seen what impact it will have on US manufactured vehicles like Teslas with substantial Chinese parts and the already slowing uptake of EV sales in thsat country.

According to Drive, the new tariffs mean car makers will now pay the value of the Chinese-made electric vehicle arriving on US shores to the government in taxes.

The trade protection in the US comes after the Australian government launched its own Future Made in Australia $22 billion proposal to turn Australia into a renewable energy superpower.

However Australia’s last major car manufacturing shut down in 2017 and the uptake of electric vehicles is driven almost entirely by imports, mainly from China.

In the US, the 100 per cent tariff comes into effect later this year.

The initial impact on US new-car buyers will not be significant, as there are only a handful of Chinese-built electric vehicles sold in the US. This is due in part to the previous tariff of 25 per cent, which remains in place for petrol-powered cars from China.

Experts have warned the Biden Administration’s new tariffs on other Chinese-made goods. Computer chips and electric-car battery materials could impact vehicles made outside of China.

US tariffs on lithium-ion batteries made in China for electric cars will rise from 7.5 to 25 per cent in 2024.

Tariffs on Chinese lithium-ion batteries for all other applications will follow in 2026.

How the tariffs will effect US car manufacturers

While they are aimed at Chinese brands, the new tariffs will hit US car makers and electric vehicles (EVs) they build in North America.

The Ford Mustang Mach-E electric SUV built in Mexico uses batteries from Chinese giant CATL – as do a number of Tesla cars made in California.

The US Government will also apply a 50 per cent tariff on the computer chips used en masse to power the electronics in modern cars.

“With extensive subsidies and non-market practices leading to substantial risks of overcapacity, China’s exports of EVs grew by 70 per cent from 2022 to 2023 – jeopardising productive investments elsewhere,” the White House says in a media release.

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