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Econometer: Is raising the tariff on Chinese EVs a good move?

Phillip Molnar, The San Diego Union-Tribune on

Published in Business News

The Biden administration quadrupled tariffs on Chinese electric vehicles this week in order to protect American automakers.

The tariffs are expected to rise to 100 percent from 25 percent for EVs. There are additional tariffs for critical minerals, solar goods and batteries.

Critics of the EV tariffs say they go against national efforts to reduce carbon emissions, and they prevent a low-cost option for consumers looking to avoid gasoline prices.

On the flip side, the American auto industry supports many high-paying union jobs and flooding an industry with cheap goods from Asia hasn't historically been good for many cities and towns across the U.S. Also, there are national security concerns: The U.S. Commerce Department has launched an investigation into whether Chinese vehicles' navigation and communication features could spy on Americans.

Q: Is raising the tariff on Chinese EVs a good move?

Economists

 

Caroline Freund, UC San Diego School of Global Policy and Strategy

NO: Eliminating import competition from China will slow the urgent transition to clean energy. If U.S. auto producers need a 100 percent tariff to compete with China, then we should not be producing EVs. The gaping tariff margin will drive up EV prices and put the brakes on efficiency-enhancing effects of global competition. Finally, China will retaliate, as they did to the Trump tariffs, hurting the most competitive U.S. exporters.

Kelly Cunningham, San Diego Institute for Economic Research

NO: Chinese producers do not pay the tariff, American consumers do. Instead of favoring only some domestic producers, the free flow of ideas, finances and trade benefits American consumers. Quality is an aspect to consider in every trade negotiation, imposing barriers limits choices and freedoms. If China produces low-cost, quality EVs that American consumers want, even if they are subsidized below their cost, why should the U.S. not take the gift as reverse foreign aid?

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