As influential US Senator Sherrod Brown calls for a ban on Chinese electric vehicles (EVs), the issue has sparked a heated debate about the threat of heavily subsidized Chinese EVs to the US automotive industry. In his letter to President Joe Biden, Brown argues that allowing imports of cheap EVs from Chinese brands is inconsistent with a pro-worker industrial policy and poses an existential threat to the US industry.
The concern about Chinese EVs is not just limited to the US, as the European Union (EU) has also launched an anti-subsidy investigation into whether the Chinese government is giving Chinese brands an unfair advantage. The EU probe found that government subsidies for green technology companies are prevalent in China, with BYD, one of the largest EV manufacturers, receiving almost $4 billion (3.7 billion euro) in direct help from the Chinese government in 2022 alone.
Chinese EVs have yet to really begin in the US, where there are a few barriers in their way, such as the fact that Chinese batteries make an EV ineligible for the IRS’s clean vehicle tax credit. Additionally, Chinese-made vehicles like the Lincoln Nautilus, Buick Envision, and Polestar 2 are subject to a 27.5 percent import tax.
However, Chinese EVs are already on sale in Mexico, and American automakers are worried that they will become a main competitor. Ford CEO Jim Farley has said that he sees Chinese automakers as the main competitors, not GM or Toyota. Tesla CEO Elon Musk has also expressed concern that if there are no trade barriers established, Chinese EVs will “pretty much demolish most other car companies in the world.”
In response to these concerns, Senator Brown has called for a tariff on Chinese EVs, not just to protect the US auto industry but also to address national security concerns. He notes that Chinese EVs could “undermine efforts to reshore semiconductor production” and raise the risk of China having access to data collected by connected cars.
The Commerce Department has also launched an investigation into the security risk from Chinese-connected cars, highlighting the need for a comprehensive solution to address the threat posed by Chinese EVs. Brown suggests using Section 421 (China Safeguard) of the Trade Act of 1974 or some other authority to ban Chinese EVs before they destroy the potential for the US EV market.
In conclusion, the issue of Chinese EVs poses a significant threat to the US automotive industry and national security. While there are barriers in place to prevent their entry into the US market, these barriers may not be enough to protect American industries. A comprehensive solution, such as a tariff or a ban, may be necessary to address the existential threat posed by Chinese EVs.