BEIJING, December 22 (TMTPost)—The Chinese government issued serious warnings against new U.S. attempt to curb electric vehicle (EV) exports.
China is “strongly opposed” to the U.S. unilateral tariff increases, which is “textbook protectionism” and may have violated the World Trade Organization (WTO)’s most-favored-nation principle and national treatment principle, Wang Wenbin, a spokesperson of the Ministry of Foreign Affairs, responded to a recent report about the possible tariff move. Wang reiterated there is no winner in a trade or tariff war, and called such tariff increases a threat of global industrial and supply chain security as they are against the principles of market economy and fair competition. Beijing urged the United States to adhere to rules, uphold the trade order for fair competition and provide a fair, just and nondiscriminatory business environment for foreign companies, Wang said. He then cautioned China will follow closely about the development and ”do what’s needed to protect our lawful rights and interests”.
Wang’s remark came on the heels of the Wall Street Journal’s report that said a review, launched by the Office of the United States Trade Representative (USTR) more than a year ago, could end up hiking tariff on some of Chinese goods. The Biden administration could decide to raise tariffs on clean-energy products, like EV, EV batteries and solar products, while lowering those on China-made consumer products, the report cited people familiar with the conversations inside the cabinet.
EVs imported from China are subject to a 25% tariff and any tariff increase would likely have little immediate impact on American consumers. However, U.S. officials grow recetnly concerned about increasing Chinese clean-energy exports and worry domestic companies won't be able to compete with China’s production, even under the protection of tariffs and new subsidies, the report noted.
The U.S. government “is taking strategic, thoughtful, deliberative approach to a bilateral economic and trade relationship with China, and that certainly applies to our review of these tariffs”, said White House press secretary Karine Jean-Pierre in response to a question about any comment or update about the ongoing tariff review.
China exported 3.32 million vehicles in 2022, with a year-over-year (YoY) growth rate of 57% and battery-electric vehicle exports account for more than one-in-four total exports, data from China's General Administration of Customs stated. The pace shows no signs of slowing year-to-date. Vehicles export volume in November surged 46.3% YoY to 482,000 vehicles and exports totaled 4.412 million units with a 58.4% YoY increase from January to November, China Association of Automobile Manufacturers (CAAM) released last week. CAAM data showcased new energy vehicle (NEV), including the battery electric vehicle (BEV) and the plug-in hybrid electric vehicles (PHEV), remained a key driver with an auto market share of 34.5% in November. There are 1.026 million vehicles sold that month, with the YoY growth of 30%. Over the past eleven months this year, NEV sales gained 36.7% to 8.304 million units, accounting from 30.8% of the market.
Washington has suggested it would impose new limits on electic vechile (EV) tax credits, which is deemed as a new curb targeting Chinese firms. In the beginning of this month, the U.S. Department of Energy (DOE) proposed interpretive rule and request for public comment on its interpretation of the statutory definition of “foreign entity of concern” (FEOC) in the Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Law (BIL). FEOC refers to companies based in China and other countries, or with at least 25% voting interest, board membership or ownership by a government of these countries. The FEOC rules will come into effect in 2024. And the U.S. Treasury Department could not treat a clean vehicle containing any critical minerals that were extracted, processed, or recycled by a FEOC qualified for EV purchase incentive beginning in 2025.
About two months ago, the European Union (EU) officially launched an investigation into EVs from China.The European Commission will decide whether to impose tariffs more than the current 10% standard rate for cars within 13 months once the investigation started. The possible tariff will affect not just Chinese automakers but also foreign brands that produce vehicles there such as Tesla, Renault and BMW. The move may result in tariffs close to the 27.5% level already imposed by the U.S. on Chinese EVs, Bloomberg reported in September following the European Commission President Ursula von der Leyenan announcing about the EV probe plan.
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