The NPR Politics Podcast - Jobs, Climate, China: Biden Unveils Robust New EV Tariffs

Episode Date: May 14, 2024

President Biden announced new tariffs on electric vehicles, semiconductors and other products to punish China for what he describes as unfair trade practices. It is expected to keep inexpensive Chinese-made vehicles out of the American market, limiting consumer access to cheap electric cars while bolstering the domestic auto and manufacturing industries.This episode: political correspondent Susan Davis, White House correspondent Asma Khalid, and cars and energy correspondent Camila Domonoske.This podcast was produced by Jeongyoon Han, Casey Morell and Kelli Wessinger. Our editor is Eric McDaniel. Our executive producer is Muthoni Muturi. Listen to every episode of the NPR Politics Podcast sponsor-free, unlock access to bonus episodes with more from the NPR Politics team, and support public media when you sign up for The NPR Politics Podcast+ at plus.npr.org/politics.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

Support for this podcast and the following message come from Autograph Collection Hotels, with over 300 independent hotels around the world, each exactly like nothing else. Autograph Collection is part of the Marriott Bonvoy portfolio of hotel brands. Find the unforgettable at AutographCollection.com. Hi, this is Brendan Angus from Atlanta, Georgia. I'm currently walking through a park in Esslingen, Germany, because I was asked to go on a week-long trip for work to Spain and Germany with one day notice. This podcast was recorded at...

12.24 p.m. on Tuesday, May 14th. Things may have changed by the time you hear this, but I'll still be finding my way around Europe for the first time. Honestly, that sounds like a good problem. I know, I'm a little envious of this work trip, you know. Yeah, I'd take one day notice and go to Europe for a few days in the springtime. That's not so bad. Hey there, it's the NPR Politics Podcast. I'm Susan Davis. I cover politics. And I'm Asma Khalid. I cover the White House. And longtime friend of the podcast, Camila Dominovsky is here. She covers cars and energy for NPR. Hello, friend.

Hello. And today we're talking about President Biden's decision to impose new tariffs on certain goods imported from China, building upon tariffs first implemented by former President Trump. Asma, what goods or industries specifically is the Biden White House looking to target here? Well, they're looking at certain specific industries that coordinate and sort of complement some of the big legislation that you've seen the Biden White House prioritize, right? Things around the Chips and Science Act or the Inflation Reduction Act. And so what that means is that they're going to double the tariff rate for things like semiconductors and solar cells. But there's also a really big change when it comes to electric vehicles.

They're quadrupling the tariff rate there. Folks, look, I'm determined that the future of electric vehicles will be made in America by union workers, period. Camila, do you have a sense, obviously it's early, but what the impact of those kind of tariffs could be on industry, specifically thinking about the EV industry? Yeah, so one thing that's really interesting about the sectors that are being targeted for the biggest tariff increases here is that they're things that we aren't currently buying much of from China. There are basically no Chinese EVs in the U.S. right now. Very,

very few. And it's a pretty small amount of the solar cells, for instance, that are coming in as well. So the tariffs that go into effect immediate, it's much more about keeping things out of the U.S., increasing the tariff to serve as even more of a deterrent where the tariffs have already been a deterrent so far. So it's things not being available rather than prices going up necessarily on goods that Americans are buying today. So it's sort of like trying to get ahead of a perceived future economic problem versus addressing one that's happening in real time. Exactly. A lot of concern that China could bring a wave of these products to the U.S. and trying to hold that off. And I think you see that just in terms of the quantifiable amount of imports this is

actually going to affect. It's about $18 billion worth of imports is what the White House is telling us. And that's in contrast to what we saw from the former president, Donald Trump, who's really the architect of the major tariff plan that's been in existence. And that was upwards of $300 billion on a lot of just like normal consumer goods, clothing, bicycles, I believe were initially on the list, a lot of just everyday things that people use that don't have any national security priorities. Camila, I have to admit, I don't fully understand what a solar cell is. Can you explain that? Yeah, we're talking about the components that go into solar panels and several of these other tariffs. There's also battery tariffs where it's not just the batteries that are being hit by these

import taxes. It's the components that go into batteries. The focus on the whole supply chain, including lots of parts that most people don't ever think about, is actually a trademark of these tariffs. Asma, this is a decision, particularly with the timing of it, that is weighted with a lot of politics. And when Donald Trump imposed these tariffs, there was a ton of criticism that came towards him from Washington, specifically from Democrats in Washington. How is the response to this announcement going over? Well, I do want to pause and go back to something you just said there, Sue, about what Democrats were saying

when Trump first implemented his tariffs, because I do think that's really important in terms of understanding where we are and why these tariffs are also being implemented right now. Because I think back to the summer of 2020, when Joe Biden was running for president, I mean, he sort of broadly scoffed at Trump's strategy, saying that, you know, essentially, we as a country were going after China the wrong way. He said that manufacturing was going into recession under Trump. And so what you hear the Biden White House say is that they are doing this in a targeted, more strategic and smarter way. They say that they are doing this in a very narrow vision, looking specifically at

certain sectors that are key national security priorities. And they're also trying to complement this with the legislation that is currently in the country to boost American manufacturing. Now, one thing I will say, though, that the big caveat here is that while the new tariffs are getting a lot of attention, another storyline here is that the Biden White House has decided to maintain the over $300 billion worth of Trump tariffs that are already in existence. You know, I asked Michael Froman about this. He was the U.S. trade representative in the Obama administration. But I mean, essentially what he told me is that politically, it's really challenging to change existing tariffs once

they've been imposed, right? You get industry that starts getting used to them, certain businesses start operating with them as baked into their plans. But again, politics, politics, it's really hard to ignore any of this when we are what six months away from an election. Sure. And in some ways, I think you can help think about it like tax cuts, too, right? Like once people implement tax cuts, it's hard to roll them back because people get used to them and like them. And tariffs similarly, on an industry or on employers, it becomes sort of built into their baseline. Although it's funny because they are taxes, right? These are taxes that are paid by American companies and consumers when these goods are imported. And I mentioned that these EVs aren't

in the U.S. right now. So it's not like quadrupling the tariff will immediately hike those prices. But a lot of these other tariffs, the ones that are being maintained, those are on goods that Americans are buying. And the fact that cheaper options aren't in the U.S., that does affect consumers ultimately, right, in the vehicles that aren't available for sale. Asma, any sense of how the Trump campaign is responding to this? Because there's an element of this that they can turn it around and say, like, look, we told you so. We were right then and we'll be right in the future. Yeah. You know, I think back to the story I did about tariffs about a year ago, and I spoke to Trump's top trade guy, Robert Lighthizer, and he told me that when they first brought these tariffs in, it felt like everyone in Washington

was against them. And now you're looking at the RNC issuing a statement saying that essentially Biden's plan is proof that the Trump era trade policy worked. And in their view, that his failed EV mandate is being taken advantage of by China. You know, I think there are some questions, though, about how Trump would really govern in a second term, especially when you talk about trade and tariff policy. He has floated all sorts of ideas. And one thing that's been getting a lot of attention is this idea of creating a so-called ring around the United States and implementing an automatic minimum 10% tariff rate on imports coming in from any country, not just China. And the Biden White House and the Biden campaign has suggested that that would really raise costs on consumers and would be very inflationary. Of course, to Camila's point, you know, you could argue that consumers often pay the price when tariffs are put in place. All right, let's take a quick break and we'll talk more about this when we get back.

This message comes from WISE, the app for doing things in other currencies. Send, spend or receive money internationally, and always get the real-time mid-market exchange rate with no hidden fees. Download the Wise app today or visit wise.com. T's and C's apply. And we're back. And I guess the question here is, any sense of how China is responding or might respond to this? Yes, we saw China's Commerce Ministry say that Beijing

firmly opposes the decision. You know, they say that it is out of step with the spirit of consensus that was reached between Biden and Chinese leader Xi Jinping, and that it will, quote, seriously affect the atmosphere around bilateral cooperation. We don't know if there is any specific retaliation yet to these tariffs. And, you know, I think a lot of folks can remember that when Trump first imposed tariffs, there was a lot to smooth things over with China to maintain a sort of strong alliance, especially when it comes to geopolitical forces. But then, you know, doing things like this, again, tests that relationship all over again. That's right. And I do think that when it comes to the relationship with China, we've seen time and again that really national security priorities seem to take precedent, right?

I don't think this is the only situation in which this has happened. There was a lot of back and forth when India's Prime Minister Modi, for example, came to the United States and how close the Biden administration was cozying up with that government, given some concerns around human rights. And fundamentally, a lot of this comes down to the fact that they want a reliable partner in the region to counter China's growing influence. And so I think, to me, tariffs kind of fit into the same vein, which is that whenever there is a test about whether or not something should be put in place, whether it's economic concerns, whether there are other political concerns, national security seems to take the top concern line for this Biden White House. about what this means for the EV industry? Because if tariffs run the risk of making a product more expensive, that seems to run counter to the Biden White House's goal of making them more accessible and more widespread in the American market. Yeah. And this is a tension that we've seen play out in a number of the Biden administration's EV policies. I mean, the consumer tax credit, for instance,

right? You can get a big discount on the cost of an EV, but only if that EV is made in America with a battery sourced from the U.S. and allies. The administration is simultaneously trying to cut emissions and build up this entire domestic supply chain. And sometimes those two goals are intention. When it comes to EVs, there is a fairly remarkable broad coalition of support for this vision of U.S.-based manufacturing for the batteries and for the vehicles. I'm thinking the auto companies themselves who are big fans of the subsidies that the Biden administration is putting toward this. Labor groups who see this as an opportunity to bring jobs back to the U.S. Green groups who have seen this as an opportunity to have a lever to not only build more EVs, but decarbonize the entire supply chain for those EVs. And then based on where these plants are going in, there are some Republicans in red states who are seeing some potential benefits for their regions of having domestic EV production.

And so the result is that the politics around domestic EV is there's a lot of support for the idea of both subsidizing and having protections in place for these cars. Not universal support. The oil industry is very firmly opposed, along with some other groups. And certainly Trump and a large swath of the Republican Party isn't on board with the EV element of this vision. But it's really a different conversation. I've called up a lot of climate groups to ask about this, and they kind of walk a careful line of, yeah, short-term it would help emissions to sell a lot of cheap Chinese EVs. But long term, they make a case for the advantages for the climate of doing it in the States. It certainly does seem that the tariff decision does at least align with the Biden White House's

climate goals. The way the Biden White House lays out their climate goals, yes, where it's both American jobs and reductions in emissions, right? Not reductions in emissions at all costs. But certainly there are lots of people who would like to buy EVs who are priced out by the current EV market, who if they could buy a Chinese EV would. Alex Partners just did a survey and found about 73% of Americans who are considering EVs would buy a Chinese mademade one if it was cheaper. But that's not really an option right now. All right, Camilla Dominovsky, as always, thank you so much for coming on the podcast and talking with us.

Yeah, thanks for letting me hang out. That's it for us today. We'll be back in your feeds tomorrow. I'm Susan Davis. I cover politics. And I'm Asma Khalid. I cover the White House. And thanks for listening to the NPR Politics Podcast.