The United States raises tariffs on batteries from China

President Joe Biden’s administration has announced higher tariffs on batteries and battery parts imported from China. According to the White House, tariffs on lithium-ion batteries for electric vehicles (EVs) and related components will rise from 7.5% to 25% starting in 2024. Additionally, tariffs on components used in other sectors will increase to 25% by 2026.

The customs duty on natural graphite will increase from zero to 25% in 2026. This change, along with other tariff increases on critical materials, aims to protect U.S. businesses from what the administration views as China’s unfair trade practices.

Continuation of policy

China dominates the global lithium-ion battery market, producing 80-90% of the world’s supply. The increase in customs duties on batteries and renewable energy products, such as photovoltaic cells, continues a policy initiated during the Trump administration in 2018. These new tariffs align with Biden’s Inflation Reduction Act, which offers tax breaks and funding for the renewable energy sector.

It’s important to note that lithium-ion batteries not intended for electric vehicles will be subject to the new tariffs two years later, giving energy storage manufacturers additional time to source U.S.-made cells. According to Clean Energy Associates (CEA), U.S. battery production is becoming cost-competitive with Chinese products, and the increased tariff provides further incentive to invest in domestic production, raising the cost of Chinese batteries by nearly 20%.

While the effectiveness of these measures remains to be seen, the Biden administration is clearly taking strong steps to bolster the U.S. energy sector.

Source: whitehouse.gov