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Biden's China tariffs aren't a competitive cure-all for US automakers, experts warn

Grant Schwab, The Detroit News on

Published in Automotive News

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

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