Tariffs on electric cars and batteries criticized

Experts see US actions as failed policy that is likely to backfire

By LIA ZHU in San Francisco and YIFAN XU in Washington | China Daily Global | Updated: 2024-05-27 09:21
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A staff member works in the Chinese electric vehicle maker NIO Power Europe Plant in Biatorbagy, Hungary, on Jan 26. The plant manufactures battery swapping stations for the European market. XINHUA

Mounting frustrations

"And the frustration that I have, and I'm not alone in this, but the frustration that I have with this is that it's a policy that does not work. And so why continue?"

The Biden administration has made it clear that it wants more and more people to drive electric vehicles to reduce the use of fossil fuels and to help in the fight against climate change, Moretti said, and now "the best affordable EVs on the market come from China".

"It seems incompatible to, on the one hand, say we want people to drive electric cars but to then turn around and say we're going to deny them access to some of the most affordable ones. I think it's a failed policy," Moretti added.

Gernot Wagner and Conor Walsh, economists in the Business School at Columbia University in New York, echoed this view. They suggested in an article in The New York Times that despite the official justification of protecting US manufacturers, the real aim is to appeal to voters in states such as Michigan, Pennsylvania and Wisconsin that will be critical in the presidential election in November.

However, the tariffs will ultimately hurt middle-class consumers by limiting access to affordable EVs, they said.

"With more cash and better credit, wealthy Americans are the only ones who can afford the electric vehicles currently on the market, which cost more than $55,000 on average. Middle-class Americans should have access to these cars, and because of these tariffs they will remain a luxury, available mainly to the rich."

Sourabh Gupta, a senior fellow at the Institute for China-American Studies in Washington, echoed the view that the move is for election purposes.

The US made the review findings of Section 301 public "this late "because their aim is political, he said.

"Only bad news was going to come out of the process."

Adding another layer of controversy is the potential violation of World Trade Organization rules, said Donald Lewis, an international trade law expert and a nonresident research fellow with the Center for China and Globalization.

"Governments should abide by their tariff bindings under the General Agreement on Tariffs and Trade, so you cannot raise tariffs above a particular level once the tariffs are set and each government agrees.

"Unfortunately, since the (Donald) Trump administration there have been massive violations of the treaty, and the Biden administration has followed suit. This is in violation of WTO law, which was established by the United States."

Moretti said that given the current political climate in Washington, "it is safe to continue to appear to be strong by doing something that hurts America" for the Biden administration.

"Ultimately, protectionism is a policy not of acting out of strength, but acting out of weakness."

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