A top U.S. trade official said Thursday the Biden administration is acutely aware of threats posed by China as America looks to ditch gas guzzlers in favor of climate-friendly electric vehicles.
Brian Janovitz, chief counsel for China Trade Enforcement in the Office of the U.S. Trade Representative, said there are levels of defense the U.S. has against the communist nation from spreading its EV influence, including a 27.5% tariff on Chinese-made vehicles and new tax incentives to bolster domestic production.
“We will obviously continue to assess the challenges. We are vigilant to threats, and we won’t take things off the table,” Mr. Janovitz said during a virtual event held by the Washington International Trade Association. “We will take responses as necessary to meet the challenges of protecting workers against unfair trade.”
A proposed rule from the Environmental Protection Agency would force U.S. automakers to sell mostly EVs by 2030, sparking concerns among the industry and Republicans that such a rapid shift would only further solidify China’s dominance over the global critical minerals market used in EV batteries.
The U.S. EV market share was less than 6% of new cars sold in 2022.
Industry analysts are also raising alarm bells about aggressive global expansion by Chinese automakers, prompting fears it will only become easier for China to penetrate the U.S. EV market or skirt tariffs by using operations in other countries to export vehicles.
President Biden’s recent handling of a separate trade issue with China raised questions about the steps he’s willing to take when forced to choose between bolstering his green energy agenda and being tough on China.
Despite later determining that Chinese solar panel companies flouted U.S. trade laws by funneling products through Southeast Asian countries, Mr. Biden kept in place a two-year tariff pause on such products to prop up domestic solar projects with a cheap foreign supply source.
The move prompted some Democrats in Congress to side with Republicans on legislation to end the tariff suspension, but the measure was vetoed by Mr. Biden.
Michael Dunne, founder of the California-based EV and autonomous vehicle consulting firm ZoZoGo, warned during Thursday’s event that Chinese automakers are likely looking for ways to subvert U.S. tariffs by ramping up EV production in nearly all corners of the globe. That includes basically everywhere but the U.S. — Southeast Asia, Europe, the Middle East, Africa, Mexico and South America.
“When we think about China’s automotive manufacturing industry today, picture a modern-day Godzilla with the power to trample on and destroy anything that gets in its path,” Mr. Dunne said. “China manufactures one of every three vehicles on the planet. China is now the No. 1 exporter to more than 100 countries … The only market we’re seeing where Chinese have not yet really begun a big assault is right here in the United States.”
Mr. Dunne said there are three main barriers to entry in the U.S. for Chinese automakers, two of which were cited by Mr. Janovitz as tools the administration is currently relying on: the 27.5% vehicle tariff, the inability to qualify for tax subsidies and the highest U.S.-China political tensions in decades.
“There’s no question that Chinese automakers are saying, ‘we’re sitting on practically half the world’s capacity for making vehicles, we’ve got to find new markets for them in Europe and the United States,’” he said. “There’s an enormous new push out of China.”
From a trade enforcement standpoint, Mr. Janovitz said China’s EV threat is why the administration is looking to beef up its supply chain. This includes Democrats’ tax-and-climate spending law known as the Inflation Reduction Act, which has tax breaks for domestic mineral and EV production.
The U.S. is also trying to determine how much Beijing is behind Chinese automakers’ global expansion and if there’s a more sinister intent than meets the eye, such as increasing America’s foreign dependency.
“Part of what we try to assess is, are investments that they’re making elsewhere part of normal commercial activity?” he said. “Or, does it represent a threat that is under the thumb of the Chinese government in a way that contributes to that dependency?”