Published: 15:01, May 17, 2024
Biden’s solar cell tax, EV levies slammed
By Ai Heping and Heng Wenli in New York

New tariffs on Chinese goods widely condemned as they will undermine energy transition, climate goals

The BYD Shark is displayed on the day Chinese EV maker BYD launched its new truck in the Mexican market, in an event in Mexico City, on May 14, 2024. (PHOTO / REUTERS)

The Joe Biden administration’s doubling of the import tax on Chinese solar cells to 50 percent has been opposed by some US contractors and social media users worldwide.

The White House said the increase “will protect against China’s policy-driven overcapacity that depresses prices and inhibits the development of solar capacity outside of China”. The administration plans to exclude equipment used to produce domestic solar panels from tariffs.

The issue of tariffs on solar products has pitted US manufacturers that want protection from what they see as cut-rate Chinese competitors against contractors and installers who seek low-priced imported panels.

Jim, a house builder in Charleston, South Carolina, who only provided his first name, said it was the wrong decision.

“South Carolina has the sunshine, and I need the solar panels to capture it,” he said. “The new tariff will mean I will pay more and so will the customer.”

He said many of his customers are recent retirees who moved to the state because of a lower cost of living and they will not be able to afford any price increase.

Keith, who has sold real estate for 15 years and asked that his full name not be used, said: “It’s hard enough now with (high) interest rates to sell anything. People want solar because it will lower their electric (bills). But they will choose spending more money to put in a pool over a higher cost for many solar panels.”

Abigail Ross Hopper, president of the Solar Energy Industries Association, a US trade group, said the new tariff also effectively means another hurdle in the Biden administration’s goal of transitioning the United States to cleaner energy.

“This misstep will have a devastating impact on the US solar market at a time when solar prices are climbing, and project delays and cancellations are adding up,” she said in a statement.

One of the key steps in the global solar industry supply chain — the production of polysilicon solar wafers that are processed into solar cells — takes place almost entirely in China.

Although US firms can create raw polysilicon, and a handful of US factories produce solar modules, the industry is almost entirely dependent on China for the middle of the supply chain, solar industry experts said. No US factory produces solar wafers or cells at scale.

Former president Donald Trump imposed a separate set of global tariffs on the solar industry in 2018. In February, the Biden administration extended those tariffs but reduced their scope by doubling the number of solar cells that can enter the US without facing any levies, an attempt to resolve the conflicting interests of domestic producers and domestic installers.

Chinese solar cells represented less than 1 percent of total US solar cell imports in the first half of last year, according to data from the National Renewable Energy Laboratory.

In 2012, the US almost entirely barred the use of solar cells and modules made in China with prohibitive anti-dumping and countervailing duties, which rerouted US solar supply chains to Southeast Asia, said Pol Lezcano, a senior solar analyst at BloombergNEF.

The Joe Biden administration’s plan to impose hefty tariffs on Chinese electric vehicles and batteries has raised questions on social media, with some calling it anti-climate, anti-competition, and an election-year gambit.

“Biden gives Plug Power (a US fuel cell company) a $1.66 billion loan commitment and simultaneously tariffs China green energy-related EV parts and metals,” Kristoffer Santucci, a stock trader, wrote on X, formerly Twitter. “That’s exactly how you stimulate inflation, fueling the fire, trying to keep this boat afloat through fiscal spending.”

One user named Will posted on X, “I’m really curious how the team behind Biden’s new China tariffs expects to hit 2030 targets for electric vehicles when they slap huge tariffs on batteries and components for batteries that fuel the EVs.”

Marian L. Tupy, a senior fellow at the Cato Institute, a public policy research group in Washington, wrote on X: “What to make of Biden’s 100 percent tariff on Chinese EVs in light of the ‘existential crisis’ posed by climate change that EVs are meant to combat? I look forward to the logical pretzels Biden’s defenders are about to twist themselves into.”

Writer and blogger “Conservative-NotCrazy”, who is also the publisher of the news website InsideSourcesDC, wrote on X: “If climate change is an existential threat and your top priority, why would you quadruple tariffs on cheap, Chinese EVs? How is this going to achieve a zero-carbon economy by 2040?”

David Kudla, CEO of Mainstay Capital Management, said: “Protectionism taken to an extreme. China makes affordable EVs that move the industry forward. But they will be made artificially expensive by tariffs, thus further crushing the growth in EV adoption.”

S.L. Kanthan, a columnist and podcaster in India who has 136,000 followers on X, said: “One year ago, people on X were telling me that nobody in the US or Europe would buy a Chinese EV. Today, automakers and politicians in America are freaking out about China taking over the electric car market. Hence the increase of tariffs from 25 percent to 100 percent.

“You can’t hide from competition forever!”

Ted Dixon, CEO of INK Research, a financial information company in Vancouver, Canada, wrote: “While you may be right about there being situations where tariffs can work, such an approach does not look good for US EVs. I believe the US has had a 27.5 percent tariff on Chinese cars since the Trump years. Raising the levies further signals it’s a long road to US EV competitiveness.”

Kai Ryssdal, who works for the Marketplace news organization and has 266,000 followers on X, said, “For what I believe is the umpteenth time — regardless of party or president — tariffs are paid by American consumers.”

Regarding the effect on Chinese EV makers, one account named “Rukumis Geopolitics” said they are “not only equipped to withstand the impact of US tariffs but can also leverage these challenges as catalysts for further growth and innovation”.

Building up new tariffs and sliding into protectionism is the wrong way to go, said a German business leader in Berlin on May 14, adding that there should be more dialogue instead.

Hildegard Mueller, president of the German Association of the Automotive Industry, or VDA, said she is very pleased the association was able to have open and key dialogues with China’s commerce minister and business leaders, and these have helped open up interest and opportunities to intensify cooperation between the two countries.

“We need to talk to each other so that it is equally possible for companies of both sides to approach mutually, produce there and sell there”, instead of new tariffs and barriers, which are not the right way forward, Mueller said.

The German car industry is on an ambitious path toward climate neutrality and has a clear road map. The VDA has committed to achieving this goal by 2050.

As the largest market for the ramp-up of electric mobility, China is indispensable for the climate neutrality of Germany’s automotive industry, as this rapid growth in China has benefited Germany technologically, Mueller said.

“In China, around 16 percent of the cars produced are exported. The German auto industry has higher export figures. We export three out of four cars produced,” she said, adding that German carmakers are happy to join the highly competitive Chinese market where three out of every 10 cars worldwide are sold.

Chinese new energy vehicles stand out in the global market and have seen export increases because of constant investment in research and development, comprehensive supply chains, and rich human resources.

The recent so-called narrative of overcapacity on Chinese new energy vehicles is “questionable” as “the Chinese numbers do not speak for it”, Mueller said, adding that fair competition globally should be welcomed and is good for all.

Last week, a BMW i5 electric car rolled off the assembly line in Shenyang, Liaoning province, marking the 6 millionth car produced by BMW’s joint venture in China since the German carmaker entered the Chinese market 30 years ago.

Volkswagen, meanwhile, has announced the establishment in Hefei, Anhui province, the firm’s largest R&D center outside Germany, to focus on intelligent connected vehicles.

Mueller regards the automotive cooperation between China and Germany in green transformation and intelligent connectivity as vitally important, encouraging the two parties to continue to be crucial partners in achieving global climate goals.

“I believe that the two markets should be closely linked,” she said, welcoming Chinese companies coming to Germany. German carmakers have shown interest in not only exporting but also producing in China, she added.

Xinhua contributed to this story.

Contact the writers at aiheping@chinadailyusa.com