The Chinese EV Tariff Domino Game

27th August 2024

Julien Chaisse is professor of law at City University of Hong Kong and president of the Asia-Pacific FDI Network.

The Biden administration's imposition of sweeping tariffs on Chinese-made electric vehicles (EVs), solar panels, steel and other goods in May 2024 represents a significant shift in global trade. The 100% border tax aims to counter China's trade practices and protect US jobs, and is triggering chain reactions that reshape global supply chains, foreign direct investment (FDI) decisions and geopolitical relations.

To meet its objectives, the US chose tariffs over other regulatory measures due to their ability to provide immediate economic protection. This urgency reflects the government's priority to deliver quick results amidst growing geopolitical tensions and economic competition. In response, the EU imposed its own tariffs on Chinese EVs, capped at 48%. While less severe than the US measures, these tariffs signal a coordinated effort to address concerns about Chinese state subsidies and market distortions. The US's aggressive approach provides strong political and economic protection, whereas the EU’s balanced strategy aims to reduce Chinese imports while attracting more FDI from Chinese firms.

Read the full article at Fdi Intelligence HERE