[Insights] US Imposes Another Measures, Raises Tariffs on Chinese Electric Cars to 100%

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On May 14, 2024, the US administration announced that it would increase tariffs on Chinese new energy vehicles from 25% to 100%. Additionally, tariffs will be imposed on Chinese products such as batteries, chips, medical supplies, and critical mineral raw materials, affecting an estimated total value of USD 18 billion in Chinese imports.

The United States believes that China’s substantial state subsidies and excess production capacity allow Chinese products to penetrate the European and American markets at low costs.

TrendForce Insights:

1. Impact of Tariff Increase on Chinese Electric Car Imports in the US Market Is Minimal

According to sales statistics from the first quarter of 2023 to the first quarter of 2024 in the US electric car market, only Geely, among the Chinese electric car groups actively operating in the US market, holds a market share of merely 2%.

By the first quarter of 2024, this share had further declined to just 1%. In fact, Chinese automakers, anticipating such measures, have already shifted their focus away from the US market to regions such as Europe, Southeast Asia, Latin America, and Russia. Therefore, the current increase in tariffs is expected to have minimal impact on China’s new energy car industry.

2. Consumers Focus on Electric Car Prices, Not Nationality

The affordability of Chinese electric cars stems from China’s long-standing high level of self-sufficiency in the entire electric vehicle supply chain, from complete vehicles to components, especially in the battery sector, which accounts for the highest proportion of total vehicle costs.

Coupled with government subsidy policies aimed at attracting consumers to purchase electric cars and increasing the overall market size, this further enhances the cost advantage of various components.

Additionally, according to data released by Gallup in April 2024, only 36% of people with an annual income below USD 40,000 would seriously consider purchasing an electric car, while those with incomes between USD 40,000 and USD 100,000 or more have a purchase intention of 45-50%.

Therefore, the high cost of electric cars remains the primary reason why consumers are currently unwilling to switch to electric cars, rather than being a matter of the car’s “nationality.”

3. Is the Decoupling Strategy for Electric Vehicles from China a Cure or a Poison?

The US administration’s decision to increase tariffs can protect the US fossil fuel car industry in the short term. With consumers unable to access cheap Chinese electric cars, they may opt for US fossil fuel cars.

While this measure may prolong the life of the US automotive industry chain, it could hinder both US and global carbon reduction goals and reduce the international competitiveness of US car manufacturers in the electric vehicle sector. 

Stellantis CEO Carlos Tavares has stated that increasing tariffs will not truly protect his company, and the only option is to continue fighting. Therefore, while higher tariffs serve as a protective shield for the domestic automotive industry chain, car manufacturers ultimately still need to face the harsh reality of global market competition.

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