May 14, 2024 - Energy & Environment

Clean tech becomes latest move in U.S.-China chess match

Illustration of China's flag with lightning bolts replacing the four small stars.

Illustration: Shoshana Gordon/Axios

By trying to stem the tide of cheap Chinese climate technology without slowing U.S. decarbonization, the White House is betting it can have its cake and eat it too.

Why it matters: It's an environmental gamble as officials unveil higher tariffs on Chinese electric vehicles, steel, batteries, solar cells, critical minerals and more.

  • It's an economic gamble, too, as the administration predicts it won't raise consumer costs.

The intrigue: And it's a political bet. President Biden could boost support in states including Michigan, a major auto hub.

  • But he's also fighting on terrain presumptive GOP nominee Donald Trump relishes: trade restrictions and being tough on China.

Driving the news: The White House is quadrupling penalties on EVs from China to 100% to prevent low-cost Chinese models from getting a beachhead here.

  • Biden, in a Rose Garden speech today, will also announce tariffs on Chinese tech that's already here in abundance.

Zoom in: Duties on EV batteries will rise from 7.5% to 25% this year, while tariffs on batteries used in energy storage will see the same spike in 2026.

  • Tariffs on solar cells will rise from 25% to 50% this year. Tariffs on natural graphite and permanent magnets would go from 0% to 25% in 2026.
  • Certain other "critical mineral" tariffs would see new 25% penalties this year.
  • It comes alongside new or higher penalties on semiconductors, certain cranes and medical products, and more.

The big picture: The move comes as the 2022 climate law and other policies are spurring massive investments in U.S. manufacturing of low-carbon tech, but competition with China is fierce.

The White House alleges "unfair" Chinese trade practices that flood the market are a threat.

  • "The president knows it is vital to invest in American manufacturing and workers and to enforce our trade laws to give our workers and businesses a fair chance to compete," National Economic Council head Lael Brainard told reporters.

Friction point: Biden aides rejected suggestions that holding back low-cost Chinese equipment will slow domestic climate tech deployment.

  • A senior administration official said effectively fighting climate change requires "diversified, not concentrated production" of key goods.
  • "Resilient supply chains" offer the best chance of meeting climate goals, the official told reporters.

What they're saying: The United Auto Workers union said it "applauds today's decisive action from the White House on ensuring that the transition to electric vehicles is a just transition."

  • The union has endorsed Biden, but Trump is courting industry workers, saying Biden's climate rules will hurt U.S. automakers.

What we're watching: The response to the tariffs from China, U.S. industries — and Trump.

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