Axios Pro Exclusive Content

The Hill's next-level China EV push

May 20, 2024
Illustration of a yellow car with lightning bolt icons surrounding it in the shape of the flag of China

Illustration: Sarah Grillo/Axios

Lawmakers are already talking about further action to keep Chinese EVs out of the U.S. after the Biden administration's tariff hike last week.

Why it matters: Bipartisan anti-China trade policy is shaping the energy transition. This conversation on the Hill is going to stay alive no matter who's in the White House next year.

Driving the news: Lawmakers from both parties told Nick they may try to build on the administration's new 100% tariffs on Chinese EVs to cut off possible imports from Mexico.

  • "There's not much economically good that Joe Biden has done, but continuing the tariff policy, I think, is good, and we're gonna have to do more," Sen. Josh Hawley told Axios.

Context: Chinese-made EVs currently have tiny U.S. market share, but companies like BYD could move manufacturing to Mexico or elsewhere to get into the U.S. market, as our colleague Ben Geman pointed out last week.

  • U.S. trade representative Katherine Tai said that issue will require a "separate pathway."

Zoom in: Hawley introduced a bill this year that would try to close that workaround by placing tariffs on all EV manufacturers with close ties to China no matter where their operations are located.

  • "We need to close the back door so that they don't evade these tariffs," he said. "I mean, they're not stupid. They and every other manufacturer is going to try to find ways to circumvent any of the tariffs."
  • Rep. Dan Kildee told Axios he sees parallels to last year's year's debate about solar circumvention.
  • "It really is a question of balance," Kildee said.

Former President Trump would likely continue with a similar set of tariffs, and possibly expand them to cover Mexico, if he's elected.

  • With President Biden moving in that direction, Hawley sees possibilities on the Hill, too, given the pro-tariff outlook of swing-state Senate Democrats up for re-election.
  • One of those Dems, Sen. Bob Casey, told Nick that Congress should "take any step possible to prevent China from undermining our markets."

Yes, but: Other Democrats have mixed views about punishing "clean" industries with deep roots in China.

  • There are also lingering questions about how Biden's latest move could impact EV supply chains, since it includes EV batteries and component minerals.
  • "Our supply chains won't materialize overnight," Rep. Scott Peters told Axios. "And there's a benefit to some competition [from Chinese EVs]."

Our thought bubble: The EV levies are preemptive, but the larger movement could slow progress in cutting greenhouse gas emissions.

Go deeper