On May 14, the U.S. government announced that in accordance with Section 301 of the 1974 Trade Act, it would further increase tariffs on electric vehicles, lithium batteries, photovoltaic cells, semiconductors and other products imported from China on the basis of the original Section 301 tariffs on China.
Under Section 301, the U.S. tariff rate on Chinese electric vehicles will increase from 25% to 100% in 2024. The U.S. tariff rate on lithium-ion EV batteries from China will increase from 7.5% to 25% in 2024, while the tariff rate on lithium-ion non-EV batteries will increase from 7.5% to 25% in 2026; Tariffs on battery components from China will also increase from 7.5% to 25% in 2024. In addition, the tariff rate on semiconductors will be increased from 25% to 50% by 2025.
In this regard, China's Ministry of Commerce said that China firmly opposes and solemnly represents that the United States abused the Section 301 tariff review procedure to further increase the Section 301 tariffs imposed on some Chinese products, which violates President Biden's commitment to "not seek to suppress and contain China's development" and "not seek to decouple and break the chain with China", and is not in line with the spirit of the consensus reached by the two heads of state, which will seriously affect the atmosphere of bilateral cooperation. The US should immediately correct its wrong approach and lift the additional tariffs imposed on China. China will take resolute measures to defend its rights and interests.
Chinese Foreign Ministry spokesman Wang Wenbin said at a regular press conference that China has always opposed unilateral tariffs in violation of WTO rules and will take all necessary measures to safeguard its legitimate rights and interests.
Wang Wenbin pointed out that in the final analysis, the United States is using the banner of "overcapacity" to suppress the advanced industries of other countries, engage in protectionism under the pretext of "fair competition," and trample on the principles of the market economy and international economic and trade rules. Wang Wenbin reiterated that China's leading position in the new energy industry is the result of a combination of comparative advantages and market rules, not from so-called "subsidies".
It is worth mentioning that the United States has increased the tariff rate on key products exported to China, which has little impact on China's electric vehicle industry and has a greater impact on the power battery industry.
According to the China Association of Automobile Manufacturers, in 2023, China's new energy vehicle exports will be 1.203 million units, a year-on-year increase of 77.6%. In 2023, the top three markets for NEV exports are Belgium, Thailand, and the United Kingdom. In other words, the U.S. is not a key market for China's EV exports.
On the contrary, the protectionism of the United States in the domestic electric vehicle industry will seriously affect the transformation and upgrading of the American automobile industry, so that American electric vehicle companies cannot fully participate in market competition, resulting in their inability to continue to innovate in the production of electric vehicles and promote technological progress.
Even if it does not compete with Chinese automakers, the U.S. will still face European, Japanese, and South Korean electric vehicle manufacturers, which are constantly improving their products and technologies in competition with Chinese automakers, which will cause the U.S. to lag behind on the electric vehicle track.
The increase in tariff rates on lithium-ion batteries in the United States will have a certain impact on China's power battery industry. Lithium batteries cover different product types such as power batteries, energy storage batteries, and consumer batteries.
According to statistics disclosed on the website of the General Administration of Customs, from 2020 to 2024, the United States has been the largest destination for China's lithium battery exports for four consecutive years. Last year, China's lithium battery exports to the United States reached US$13.549 billion (about 97.9 billion yuan), accounting for 20.8% of total exports.
In the first quarter of this year, the United States remained China's largest export destination for lithium batteries, accounting for 22% of total exports, amounting to US$2.908 billion (about 21 billion yuan). Taking China Innovation Airlines as an example, the sales revenue from the U.S. market last year was 44.04 million yuan, accounting for about 0.1% of the annual revenue.