WASHINGTON — Auto industry experts warn that new Biden administration tariffs aren't a silver bullet against Chinese competition.

President Joe Biden announced the tariffs Tuesday, targeting $18 billion worth of Chinese goods including electric vehicles, lithium-ion batteries and their components, steel, semiconductors and more.

"We're not gonna let China flood our market making it impossible for American auto manufacturers to compete fairly," the president said during a Rose Garden address at the White House.

The move is part of a continued push from Biden to protect the U.S. auto industry from what many view as an existential threat from emerging Chinese companies with high-quality, low-price electric vehicles. The new tariffs might buy the United States time to catch up, according to experts. But they also warn that domestic and foreign competition from China is inevitable, and American automakers should not use this moment to relax.

"This is only delaying a pain if they don't get serious about making changes," said Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners.

Electric vehicles, widely acknowledged as the future of the global auto industry, are still far less profitable than gas-powered cars in the U.S. market. For example, Ford Motor Co. loses $100,000 on every EV it sells, and the company cut battery orders last week amid those losses.

China, meanwhile, is far and away the world leader in electric vehicle sales, according to data from the International Energy Agency. EVs are projected to make up 45% of the Chinese domestic market this year, and Chinese EVs will make up 60% of global EV sales, per the IEA.

Accused by the Biden administration of overproducing and trying to dump cheap goods elsewhere, Chinese companies have begun branching into other markets. Chinese automakers sold almost no EVs in Europe two years ago, but now they have 10% of the electric vehicle market, Ford CEO Jim Farley said this week.

Politicians and U.S. industry leaders have sounded alarm bells in recent months over something similar happening stateside.

Buying time, at a cost

Tuesday's announcement comes after a four-year review of Trump-era tariffs by the Office of the United States Trade Representative. The tariff package raises duties on Chinese EVs tariff from 25% to 100% in 2024, even though no Chinese company directly sells such vehicles in the United States.

"This is a preemptive strike for the Biden administration, to impose some tariffs at this point in time before they're even here," said Sam Abuelsamid, principal e-mobility analyst at market research firm Guidehouse Inc.

"That's just going to nuke all Chinese EV exports to the U.S.," Noah Smith, former Bloomberg economics writer, said of the tariffs in a Substack post.

The Biden administration move also raises tariffs on lithium-ion batteries and related components from 7.5% to 25% this year and introduces a brand new 25% tariff on natural graphite and permanent magnets. Those materials are used in EV manufacturing.

"Despite rapid and recent progress in U.S. onshoring, China currently controls over 80% of certain segments of the EV battery supply chain," the White House said in a press release. "Concentration of critical minerals mining and refining capacity in China leaves our supply chains vulnerable and our national security and clean energy goals at risk."

The Biden administration downplayed the potential costs caused by the tariffs for automakers who rely on China for EV components and other items.

"In the near term, the tariffs are structured in such a way as to give American industry some time to adjust to them," said Jared Bernstein, chairman of the White House Council of Economic Advisers.

"When you're talking about EV batteries, we have our own domestic producers that are standing up as we speak. ... Literally hundreds of billions in private capital has come in from the sidelines, complemented by measures in the Inflation Reduction Act," he added in a phone interview with The Detroit News.

But several industry experts told The News that the tariffs, at least in the short term, will raise costs for automakers who source some critical items from China.

"The industry can't change that quickly," said Sam Fiorani, vice president of global vehicle forecast for AutoForecast Solutions. "A large portion of battery technology for electric vehicles and electronics for many vehicles have roots or fully sourced parts from China."

Automakers that rely on China will likely need to absorb the cost of new tariffs while they look for alternative supply chains.

'That dam is gonna break'

Even with the new tariffs, industry observers said Chinese automakers will eventually come stateside. Wakefield of AlixPartners called it inevitable, though he and others offered some important caveats.

There is a long list of reasons — even before the new tariffs — why Chinese automakers are likely to stay away for the next several years.

For one, uncertainty looms over the U.S.-Mexico-Canada trade agreement. The agreement contains a loophole wherein Chinese companies could manufacture vehicles in North America, as BYD plans to in Mexico, and ship them to the United States as a way to avoid tariffs. A review and potential renegotiation of the agreement is set for 2026.

There is also a rigorous process for shifting vehicle manufacturing to meet U.S. safety standards. And an ongoing investigation into Chinese internet-connected vehicles. And overall hostility from Americans, including politicians, to Chinese companies. And opportunities for profit in more welcoming markets, like Latin America.

Still, the U.S. domestic market is a valuable prize — with clear gaps.

"The Chinese are coming to the U.S. It's a big market. They want to be here," said Tu Le, founder of Sino Auto Insights. Le recently attended the Beijing auto show, where he said legacy automakers from Europe and North America were outclassed by their Chinese counterparts.

"What they brought was just not very good relative to the level of quality, reliability, design, you name it. And there's just so many Chinese competitors," Le said.

"My concern," he asked rhetorically about the new tariff package, "is will it give the Detroit Three a false sense of security? Because it might buy them two and a half, three years. But that dam is gonna break."

If the Chinese companies are not able to export into the U.S. market, Wakefield and others predicted that they will find other ways in. For one, he said, they could build factories in the U.S., as Japanese and Korean automakers have successfully done since initially facing tariff barriers in the 1970s.

He also suggested they could try to form partnerships with companies that have existing American operations. Volvo Cars already has such a partnership with Geely Holding, a Chinese auto manufacturer. Ford, meanwhile, has a partnership in Michigan's Marshall to build a factory to produce batteries using technology from China's Contemporary Amperex Technology Co., Limited.

"These are the early innings," Wakefield said.

Political and automaker reaction

Former President Donald Trump slammed the Biden administration's move, attacking his policies that promote EVs.

"Joe Biden's action today is a weak and futile attempt to distract from the grievous harm his insane Electric Vehicle mandate is doing to the U.S. auto industry and how his radical policies are wiping out thousands of American auto jobs," Trump campaign press secretary Karoline Leavitt said in a statement.

But in Michigan's congressional delegation, there was bipartisan support for the move.

Democratic U.S. Rep. Debbie Dingell of Ann Arbor, a longtime voice for the auto industry in Washington, cheered the new tariffs.

"We're trying to make sure we're building capacity in the U.S. and creating jobs here. And not competing with a foreign country or communist country that subsidizes its production, doesn't pay its workers a decent wage, doesn't have environmental standards, and doesn't have occupational safety standards," she told The News.

Republican U.S. Rep. John Moolenaar of Caledonia, chairman of the House Select Committee on the Chinese Communist Party, also praised the move.

"This tariff action is both overdue and directly in line with bipartisan recommendations in the Select Committee’s economic policy report in December. We must act with urgency to further reduce dependence on the (People's Republic of China) and prevent a surge in Chinese exports from decimating U.S. industry and workers and undermining our national security," he said in a statement.

The Alliance for Automotive Innovation, an industry group representing all major U.S. automakers except for Tesla Inc., cautiously commended the Biden administration's efforts to protect the U.S. auto industry, though it skirted comment directly on tariffs as a method for doing so.

“Automakers embrace fair competition. We’re not shrinking from it, but China’s EV overcapacity and subsidy issue is real. The competitiveness of the auto industry in the U.S. will be harmed if heavily subsidized Chinese EVs can be sold at below-market prices to U.S. consumers," Alliance President John Bozzella said in a statement.

“It’s appropriate for the White House to be looking at tools to prevent the U.S. from becoming a dumping ground for subsidized Chinese EVs. We can’t let China’s EV overcapacity problem turn into a U.S. auto industry problem,” he added.

Leaders of General Motors Co. and Ford were similarly subdued in their responses, careful to avoid sensitivities on politics and business relationships with China.

“We're focused on how do we continue to have strong brands with winning designs, the right technology, but at the right price, and so that's what we're going to continue to focus on,” GM CEO Mary Barra said in a Tuesday morning interview with The News.

“Generally, I like to say, ‘Hey, give us a level playing field and then we have to win the business,' ” she added.

Ford, in a statement sent by spokesperson Melissa Miller, said it "has been consistently supportive of U.S. policymakers ensuring a level playing field to compete by protecting supply chain integrity, national security and data privacy, and by supporting American manufacturing. With respect to the proposed tariffs, we defer to the government’s experts."

"Our priority is to ensure that our great products will position Ford to compete and win against all the best automakers around the world, including Chinese OEMs,” the statement said.

Michigan front and center

The U.S. auto industry, electric vehicles and China have emerged as crucial topics in the upcoming presidential election rematch between Biden and Trump — especially in battleground Michigan. The two have jostled for position over who will more strongly protect the prosperity and longevity of the state's most important industry.

Trump, whose administration set a prior 25% tariff on Chinese vehicles, said at a New Jersey rally on Saturday that the new 100% tariff on Chinese EVs should have gone into place years ago. He said Biden "finally listened," suggesting that his calls for higher tariffs spurred the administration to take action.

On Tuesday, political signals to that end at Biden's Rose Garden address were far from subtle. Biden repeatedly touted his support from labor unions and signed the tariffs into effect in front of several union representatives, including a member of the United Auto Workers. Biden alluded to his "predecessor" often, saying Trump's calls for across-the-board tariffs on China are less targeted and would harm American consumers.

The president also made sure to place Michigan — quite literally — front and center for his remarks.

Four Democratic members of the Michigan congressional delegation sat in the first row, and the president acknowledged each of them by name. "The front row is a Murderer's Row," he said, an allusion to the famously prolific offense of 1927 New York Yankees.

The members were U.S. Sen. Debbie Stabenow of Lansing, Dingell, Rep. Elissa Slotkin of Holly and Rep. Haley Stevens of Birmingham.

"You're responsible for a lot of this," Biden said to them.

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