China is making cheap, high-quality EVs. Why does the U.S. want to stop you from buying one?

What’s happening

President Biden announced new tariffs on certain Chinese goods earlier this month, including a whopping 100% tariff on electric vehicles (EVs) made in China. The policy could prevent the world’s most popular, most affordable EVs from ever making their way onto America’s roads.

“We’re going to protect the American autoworker,” Biden told Yahoo Finance shortly after announcing the new tariffs, which he said were designed to derail China’s plan to “flood the market with EVs” and “put everybody else out of business.”

The reason the president believes workers at companies like Ford and General Motors need protection is that China has rapidly become a dominant global force in electric vehicle production. Thanks to hefty government investment, cheap labor and their country’s robust reserves of key minerals, Chinese automakers have developed a wide range of EVs that are of comparable quality to anything made in the United States but often sell for a fraction of the price.

Biden considers EVs, which are far more efficient than gas-powered cars, to be a critical part of the green energy transition needed to stave off the “existential threat” of climate change. To help Americans make the switch, he pressed Congress to pass bills that include generous subsidies to make EVs more affordable and billions of dollars to help build out the nation’s charging infrastructure.

But EV adoption in the U.S. has been relatively slow and has even shown signs of stalling recently. One of the big reasons for that is American EVs are expensive. The average new EV sold in the U.S. last year cost more than $55,000 and the cheapest ones available are still close to $30,000.

In China, many of the most popular EVs sell for around $12,000 — and some budget models cost less than the average e-bike. Those low prices have led to an explosion in EV sales in China. Last year, more new EVs were registered there than in the rest of the world combined. China’s biggest EV company, BYD, has also passed Tesla to become the top electric car producer on the planet.

Very few Chinese EVs have made their way to the U.S., in part because of a 25% tariff that is in place. The new 100% tariff will effectively double the purchase price should Chinese automakers decide to try selling their cars in America.

Why there’s debate

China’s EV boom has put two of Biden’s top priorities in direct conflict. Welcoming them into the U.S. market could provide a huge boost to America’s green transition, but it might also deal a massive blow to the U.S. auto industry — and possibly cost a lot of autoworkers their jobs.

With this new tariff, Biden has made clear that he believes the dangers of Chinese EVs far outweigh the potential climate benefits. In his view — one shared by the U.S. automakers, their workers’ unions and former President Donald Trump — there is simply no way for American companies to compete with China’s “unfair [trade] practices.” According to the Alliance for American Manufacturing, cheap Chinese EVs could become an “extinction-level event” for the American auto industry. Supporters of the tariff say the U.S. needs more time to develop a domestic EV industry that is sustainable, efficient and capable of competing in the global marketplace.

But critics of the plan say Biden is betraying his climate goals and denying American consumers affordable EV options they desperately need so that Detroit can be saved from its own mismanagement of the electric vehicle market. They worry that shielding American automakers from real international competition will allow them to cling to their failing business model indefinitely and ultimately cause the U.S. to fall irretrievably behind the rest of the world.

What’s next

Biden told Yahoo Finance that he expects China to retaliate against his new tariffs, but it’s unclear what form that retaliation might take or how it might affect American consumers. Chinese automakers are reportedly looking to start making EVs in Mexico to get around the new tariffs, but the White House says the U.S. may impose new trade restrictions to close that potential back door into the U.S. market.

Perspectives

The American auto industry will die if forced to battle China on level ground

“There are few things that would decarbonize the U.S. faster than $20,000 EVs. But there is probably nothing that would kill the U.S. auto industry faster, either.” — David Autor, an economist at MIT, to the Atlantic

Biden shouldn’t rescue U.S. automakers from their own bad decisions

“For years, American companies simply didn’t care about EV development, while Chinese companies did. Detroit should not be rewarded for its lack of vision, nor should consumers be penalized for it.” — Micheline Maynard, Boston Globe

The U.S. can’t allow China to own the green energy future

“Over the long term, the tariffs could deliver climate benefits by preventing a single country from forming its own clean energy cartel. The Chinese government has a long history of using economic coercion to achieve its desired political ends. It is naïve to believe that Beijing would not exercise this same leverage in certain clean energy fields.” — Joseph Webster, Atlantic Council senior fellow

Winning the election is the most important thing Biden can do for America’s climate future

“Politically, Biden has little choice here, given who he’s running against and the threat to his domestic manufacturing agenda, where he has a good story to tell at the moment. The workers on the front lines of Chinese entry into the auto market live in Midwestern states Biden must win to earn re-election; the heart of the manufacturing renaissance is in red states where Democrats need to gain a foothold.” — David Dayen, American Prospect

Without real competition, American EVs will never improve

“In a market where affordable, forward-looking products are excluded, the U.S. auto industry risks becoming complacent. That could hurt consumers and cause U.S. automakers to fall behind competitors in markets abroad.” — Bryan Pietsch, Washington Post

Detroit has everything it needs to defend itself without the government’s help

“But instead of just de facto banning the competition from giving Americans access to affordable hot new EVs, the US should instead try making affordable hot new EVs itself.” — Jameson Dow, Electrek

Detroit needs to be protected but not forever

“In the short term, American automakers … must be shielded from a wave of cheap cars. But in the long term, Mr. Biden must be careful not to cordon off the American car market from the rest of the world, turning the United States into an automotive backwater of bloated, expensive, gas-guzzling vehicles.” — Robinson Meyer, New York Times

Americans don’t want what China is selling

“Americans want a lot more from their vehicles, they tell us with their pocketbooks: roominess, luxury, technological refinement, amenities. This turns out to be especially true of the EVs they buy, which tend to be large, powerful and luxurious, and therefore notoriously climate-unfriendly. So the threat of the supercheap Chinese plug-in vehicle is exaggerated.” — Holman W. Jenkins Jr., Wall Street Journal

The tariffs will mean Americans will continue to pay more for worse cars

“The idea that this policy helps the American middle class overall is laughable. … Barriers to importing cheap cars make inflation worse and reduce the real incomes of the middle class.” — Dylan Matthews, Vox

China is dominating a race no one should want to win

“That China is leading in bad technology is the equivalent of bragging that one is the world’s best LaserDisc manufacturer ... erm, congrats?” — Luther Ray Abel, National Review