US China Policy Is Squeezing EV Consumers — And It's About To Get Worse

The push toward electric vehicles continues to be a rocky one. If you were hoping to get your hands on a cheap EV, it looks like those dreams may be dashed. In May 2024, president Joe Biden announced the tariff rate on electric vehicles produced in China would increase from 25% to 100%. The White House says this is to protect American manufacturers from China's trade practices. Essentially, it'll ensure EVs bought in America will be made in America.

While that sounds good on paper, it could price people out of buying an EV in the near future. Dr. Laine Mears, Automotive Manufacturing Chair at Clemson University, says this could end up having a negative effect on potential customers who want affordable vehicles.

"The tariff on Chinese EVs will go from 25% to 100% this year — sounds pretty drastic to me, and does not bode well for EV affordability for U.S. consumers," Dr. Mears said.

Upfront costs of EVs typically run higher than their gas counterparts, and this new tariff enacted on China won't do a whole lot to ease the burden on wallets. While you'll end up saving some money in the long run by skipping the gas pump, EVs are still a tough sell for a lot of people.

EV sales have lagged as of late, and big changes are being made such as Ford announcing a downshift in the production of the F-150 Lightning so it can focus on meeting demand for other vehicles. As the sales continue to stall out, automakers would presumably be looking to take any steps they can to make their EVs more appealing to potential buyers. Low prices are one way to do that, but the China tariff makes that difficult. 

Similar tariffs will be applied by the EU with Chinese manufacturers BYD and Geely seeing additional tariffs between 17.4% and 20%, while SAIC will be hit by an additional 38%. These are hefty taxes, but they are still lower than the measures the U.S. took against China. These taxes will make it difficult for China to ever gain a large foothold in both Europe and the U.S. Despite the reputation, some Chinese EV automakers are solid.

"There are successful Chinese EV makers and they make really affordable cars, but if they will be allowed in the U.S. is a question for legislators," Dr. Mears said.

As it stands right now, one of the most affordable electric cars available in the US is the Nissan Leaf and even that costs close to $30,000. For some people that's an affordable price, but for others the cheaper Chinese cars could've been a real option. If things stay as they are, it's unlikely we'll see many Chinese EVs in the states.