On May 14, local time in the United States, the White House announced that it would significantly increase Section 301 tariffs.
Specifically:
- Tariffs on electric vehicles increased from 25% to 100%
- Tariff on power batteries increased from 7.5% to 25%
- Tariffs on lithium batteries for non-electric vehicles increased from 7.5% to 25% (from 2026)
- Tariff on battery components increased from 7.5% to 25%
- Tariffs on natural graphite, permanent magnets and other critical minerals increased from 0 to 25% (to be implemented in 2026)
This is followed by semiconductors, solar cells, harbour cranes, steel and aluminum, as well as some medical products.
The Ministry of Commerce responded to the U.S. move to raise tariffs on electric vehicles and other products in China, responding that it expressed firm opposition to the results of the four-year review of the Section 301 tariffs and made solemn representations; This is a typical political manipulation by the US side to politicize and instrumentalize economic and trade issues out of domestic political considerations, which will seriously affect the atmosphere of bilateral cooperation.
China will take resolute measures to defend its rights and interests.
Interpreting EV tax rates
Chinese exports to the U.S. market, which used to be subject to tariffs totaling 27.5 percent, will rise to 102.5 percent after the increase.
So how many tariffs are imposed on U.S. cars exported to China?
This is a topic that some car enthusiasts are more concerned about, and the correct answer is that they need to bear customs duties, value-added tax, consumption tax and purchase tax, and the tariff on imported cars is 15%, and the value-added tax is 13%, which is still much lower than the tariffs imposed by the United States on Chinese-made cars. However, the consumption tax is relatively special, and the import of American cars or American cars needs to be levied according to the displacement, but there is another important knowledge point here - the import of new energy vehicles is exempt from consumption tax.
Therefore, the comprehensive tax rate is the basic tariff plus value-added tax plus consumption tax, and the import of new energy vehicles only needs to calculate the basic tariff and value-added tax, which is 28%.
The comprehensive tax rate for imported fuel vehicles is relatively high because the consumer tax rate is determined by displacement.
The consumption tax rates corresponding to different emission standards are as follows:
- ≤1.5L,1%
- ≤1.5L,3%
- ≤2.0L,5%
- ≤2.5L,9%
- ≤3.0L,12%
- ≤4.0L,25%
- >4.0L,40%
For example, the Chevrolet Tahoe, a new model recently introduced by General Motors of the United States, is equipped with a 2.7-liter inline four-cylinder engine, and its combined tax rate is 15%, 13%, and 12% combined, for a total of 40%.
The larger the displacement, the higher the consumption tax, and vice versa, the lower the consumption tax, which is reasonable; Because the emission is large, the emission is high, and the pollution control cost caused by the emission will also be high, so it is understandable to distinguish the taxation standards according to the emission volume. This is also the reason why China can give tax exemption for imported new energy vehicles, after all, these cars are emission-free.
To sum up, China has given a tolerant attitude towards new energy vehicles manufactured by overseas enterprises, and has given the greatest support in terms of import tariffs; On the other hand, the US approach is typical of trade protection, and it is a despicable practice that undermines free economic and trade trade. Since its local car companies are still focusing on internal combustion engine vehicles, and there are almost no car companies other than Tesla that focus on the field of new energy vehicle technology, competitive Chinese-made electric vehicles exported to the United States will inevitably gain a large market share; However, in the Chinese market, when internal combustion engine vehicles are dominant, the market share of the three major car companies of the United States, General Motors, Ford Motor and Chrysler has also reached more than 10%, and China has never put obstacles in the way of these American car brands.
What does the positive and negative mean?
Looking at the current market share of U.S. auto brands in China, take the retail sales data in April 2024 as a reference; General Motors and Ford have a combined market share of 3.88%, while Tesla accounts for about 2.60%, and the market share of U.S. cars has fallen sharply, and the sales of imported U.S. cars are also not ideal, which may be one of the reasons why the United States will set up obstacles for Chinese-made electric vehicles.
However, if China chooses to take reciprocal countermeasures, will the US automakers lose more or the Chinese automakers lose more? Maybe Americans should think about it.
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