As President Biden strives to prove his pro-manufacturing and anti-China credentials ahead of his likely election rematch with former President Trump, his far-reaching climate agenda could pay a price.
Biden this past week hiked tariffs on electric vehicles, solar panels and battery technologies — key tools for fighting global warming that all have significant ties to China.
The moves come as Trump has repeatedly bashed Biden’s climate goals as bad for workers in key swing states ahead of the November election.
The new 100-percent tariff on electric vehicles isn’t expected to have a significant effect on the status quo, as existing tariffs largely already keep out Chinese-made cars. But the new taxes could still ensure that the world’s largest producer of affordable EVs will never be able to sell its products in the U.S.
Likewise, the new import taxes on solar panels and batteries could slow-track the emissions reduction policies that are central to the energy transition.
Biden also imposed steeper tariffs on other products that are essential in a shift toward renewable energy, including steel and aluminum, semiconductors, and minerals such as manganese, cobalt and aluminum.
“What Biden has done is to underscore that he prefers trade protectionism to decarbonizing the economy,” Robert Lawrence, head of the trade policy program at the Harvard Kennedy School, told The Hill.
Asked if the tariffs, particularly on solar panels, would hamper deployment of renewable energy in the U.S., former State Department official Rick Switzer said it would likely cause a “12-month lag in some areas of deployment.”
However, Switzer said the trade barriers imposed by the tariffs could also help to spur investment in domestic industries and supply chains that are being redesigned to support the energy transition.
“There are a lot of people on the sidelines deciding whether to invest” in U.S. manufacturing, and the move could be a factor in driving that investment, said Switzer, who worked on science and technology issues at the U.S. embassy in Beijing.
The moves come as Biden courts voters in swing states, including key manufacturing hubs such as Michigan and Georgia.
“Having a healthy and growing solar manufacturing sector in the United States is good for my state," said Sen. Jon Ossoff (D-Ga.) when asked about Biden's new solar tariffs.
“I appreciate and had urged the president’s targeted trade action focused on ensuring that abusively subsidized Chinese solar products do not destroy U.S. solar manufacturing,” Ossoff said.
He also called for the Biden administration to take "strong action" in its implementation of a tax credit for renewable energy projects that use domestically produced components.
The administration’s move comes as Trump and Republicans have broadly sought to paint the administration’s climate agenda as bad for American workers.
Trump told supporters in Ohio earlier this year that there would be a “bloodbath” for the auto industry if he isn’t elected, citing Biden's push to accelerate electric vehicle adoption in the U.S.
Biden's EV push was a major sticking point with the United Auto Workers union, which eventually endorsed him after receiving assurances from the administration and the president's support during its strike earlier this year.
While Republican lawmakers have voiced support for the protectionism on display in the Biden tariffs, they are also criticizing the move as insufficient.
“Those tariffs are too little too late. They should have been imposed long ago. This is nothing more than politics by the Democrats and by the Biden administration,” Rep. Buddy Carter (R-Ga.) told The Hill. “Look, we can’t compete against China when [their companies] are being subsidized by the party.”
Not all of the Biden administration’s policies have taken this same protectionist approach. The administration recently loosened battery sourcing requirements allowing more cars to qualify for tax credits even if they have some minerals originating in China.
This week — amid the tariff announcements — the administration also made it easier for renewable energy producers to get a domestic-produced content tax credit.
The administration’s moves overall actually received praise from the Sierra Club, an environment advocacy group.
“One of the best ways of addressing the climate crisis and deploying all of the clean energy that we need to do that is to have a strong, robust manufacturing base here domestically,” said Patrick Drupp, the group’s director of climate policy,
“This was a good and nuanced and thoughtful, action by the administration to try and do that and to try and balance the needs of deploying solar as rapidly as possible with building up a domestic manufacturing base,” Drupp said.
But of the new actions announced this week, Chinese lithium ion battery exports are likely among the most disruptive single tariff among the new tranche. China is far and away the largest exporter to the U.S., accounting for $9.3 billion in total battery imports in 2022, according to United Nations Comtrade data.
Pranati Kohli, an analyst on the Trade & Supply Chain team at commodity and energy research firm BloombergNEF, said that the tariffs are expected to be particularly impactful on battery deployment — especially batteries that power energy storage technology, which allow solar and wind power to be used at times when it is not sunny or windy.
“There is very little US production,” of this type of battery, Kohli said.
Derrick Flakoll, a Bloomberg policy associate, noted that additional tariffs on permanent magnets could be a “big problem” for offshore wind.
U.S. businesses are expressing some hesitation about the pugnacious turn toward protectionism and about Biden’s new tariffs themselves.
“We can’t instantly reshape supply chains that took decades to build — especially the supply chains that bring us vital inputs and components essential to our everyday lives,” the National Association of Manufacturers, a trade group representing U.S. heavy industry, said in a Tuesday statement.
The group encouraged the passage of more trade deals and tariff regimes to prevent U.S. manufacturing from “being disadvantaged by our own government.”
Automakers have sounded notes of approval on the tariffs, but also implied that the tariff hike was abrupt and that it would take more time for electrical vehicle production pipelines to be engineered away from China.
“It just won’t … and can’t … happen overnight,” the Alliance for Automotive Innovation trade group said in a statement. “It takes time for complex global supply chains to form."
