President Joe Biden is raising the price of clean energy components imported from China to accelerate America’s building spree of solar panels, batteries and electric vehicles.
But it jeopardizes the United States’ goal of slashing climate pollution in half within six years, according to analysts, and threatens to increase the pace of reaching climate change tipping points that could intensify already dangerous temperatures.
The president’s tariffs on Chinese equipment announced Tuesday come as renewable energy installations are booming across the U.S., driven by affordable parts imported from Asia. Even with that skyrocketing amount of cleaner energy, the country is at risk of missing Biden’s 2030 climate goals due to the prevalence of gasoline cars and an electric grid that’s largely powered by fossil fuels.
The new tariffs make meeting the nation’s climate goal even harder.
“This is probably not good climate policy,” said David Rapson, an economist at the University of California, Davis, who serves as an adviser to the Federal Reserve Bank of Dallas. “It will certainly slow the adoption of clean technologies in the short term, and will likely slow them in the long term as well.”
Biden’s tough rhetoric on China is tailored for the presidential campaign trail where he faces an opponent who argues that the U.S. should be more isolationist and ramp up its competition with the communist country. But it also has the potential to significantly undercut Biden’s goal of shifting the economy away from fossil fuels.
Biden is quadrupling the tax on Chinese electric vehicles to 100 percent, doubling the solar tariff to 50 percent and tripling EV battery tariffs to 25 percent. The levies highlight Biden’s long-term view of building out the nation’s clean energy manufacturing base, to transform the U.S. into a powerhouse producer of electric vehicles, solar panels, batteries and other technologies to cut carbon emissions.
“China heavily subsidized all these products, pushing Chinese companies to produce far more than the rest of the world can absorb and then dumping the excess products onto the market at unfairly low prices, driving other manufacturers around the world out of business,” Biden said in the Rose Garden on Tuesday.
In the short term, though, the tariffs could put his climate goals further out of reach. Biden wants the U.S. to move rapidly to reduce carbon dioxide emissions by 50-52 percent from 2005 levels. He signed a law to help make that happen: The Inflation Reduction Act, with its nearly $370 billion in clean energy incentives, has made it more affordable for people to put solar panels on their roofs and electric vehicles in the driveways.
Tariffs could dampen that growth by raising prices on those technologies, many of which are made by Chinese companies.
“This is horrible news for American consumers and a major setback for clean energy,” Colorado Gov. Jared Polis, a Democrat, posted Tuesday on the social media site X, formerly known as Twitter. “Tariffs are a direct, regressive tax on Americans and this tax increase will hit every family.”
The White House views the tariffs as a needed step toward creating American jobs.
“Cheap Chinese EVs that negatively impact U.S. businesses or workers does not further the cause of EVs in this country,” a White House official told reporters Monday.
‘Raise some risks’
Major environmental groups lined up to support Biden’s plan, echoing the White House that the tariffs would reduce U.S. reliance on China at a pivotal moment in the energy transition.
“We cannot trade a dependency on foreign oil for a clean energy future reliant upon China,” Sierra Club President Ben Jealous said in a statement. “We must continue to invest and build our clean energy future in America.”
Former President Donald Trump blasted Biden on Tuesday on the way into his criminal trial in New York, where he’s charged with 34 felonies for allegedly falsifying business records to hide hush money payments to a porn star who says they had sex in 2006.
“China’s eating our lunch right now, and they went away from what I was doing,” Trump said. “They’re eating our lunch, so they have to do it on much more than electric vehicles, and they have to get going fast, but it should have been done three and a half years ago.”
Biden has long been critical of tariffs imposed by Trump on China. Now, Biden is casting his tariffs as a way to ensure that U.S. manufacturers and their workers benefit from the green transition. He’s betting that the levies will give young U.S. manufacturers a foothold in a clean energy market that’s saturated with Chinese products.
“When you’re removing that many high-quality and low-cost products from the market, you really do raise some risks to near-term emissions reduction goals,” said Barry Rabe, a political science professor at the University of Michigan.
The tariffs also lessen pressure on U.S. manufacturers to compete with foreign products on price and quality — a fact that could keep the cost of domestic products high. That, in turn, could make internal combustion engines and fossil fuels generation more competitive with domestic EVs and renewable power, at least in the near term, Rabe said.
Arthur Wheaton, director of labor studies at Cornell University, said the tariffs would prevent “dumping” of cheap and highly subsidized Chinese electric vehicles. That could give U.S. companies a window to build out their own product lines and develop infrastructure — like charging stations and repair shops.
“If you’re buying [EVs] from a Ford or GM dealership, you’ve got an entire network across the U.S., and you can go get them serviced, fixed or recalled,” said Wheaton. “But if you’re getting them from BYD, good luck getting it fixed in China.”
Solar, battery exemptions
While electric vehicles have dominated much of the discussion surrounding the tariffs, it may be the additional duties on solar components and batteries that have a bigger effect on the energy transition in the United States. Many climate and energy modelers expect the electric sector to provide the majority of U.S. emissions reductions this decade. Biden has targeted 100 percent carbon-free power by 2035, up from 40 percent last year.
But where China accounts for a small portion of EV imports to the U.S., it is a major supplier of critical minerals, solar panel components and batteries.
“When I look at this whole thing, what I see is a lot of supply chain risk and cost for the things that are essential to the clean energy transition,” said David Victor, a professor who studies the energy transition at the University of California, San Diego.
The ultimate impact of the tariffs could depend on how China chooses to respond.
“Frankly, we’re vulnerable to whatever retaliation happens,” Victor said.
Industry groups nevertheless applauded the move. The American Clean Power Association, a trade group, said the move “recognizes the value of battery energy storage and its importance to the reliability of our electric grid.” The statement did not mention the tariffs’ impact on wind or solar.
That was echoed by the Solar Energy Industries Association, which noted that the administration exempted solar manufacturing equipment from additional duties and delayed tariffs for batteries used in the power sector until 2026.
“We are evaluating the announcement to determine its full impact, but it’s clear that several of these decisions will help improve the business conditions for American manufacturers,” SEIA CEO Abigail Ross Hopper said in a statement.
Solar analysts said they expected the impact of the new tariffs to be limited. While China dominates the global solar manufacturing market, direct sales from the country to the U.S. are limited.
China accounted for less than 1 percent of solar cells and modules imports to the U.S. in the first quarter of 2024, said Elissa Pierce, an analyst who tracks the industry at Wood Mackenzie, a consulting firm.
Instead, components like wafers are made in China and shipped to countries in Southeast Asia, where they are placed into cells, assembled as part of a solar module and shipped to the U.S. Almost 60 percent of imported solar cells, for instance, came from Cambodia, Malaysia, Thailand and Vietnam last year, Pierce said.
But many of the companies working in those countries are headquartered in China, prompting cries from U.S. solar manufacturers that Chinese firms were evading solar tariffs that were already in place before Biden’s announcement Tuesday. In August, the Commerce Department cited eight Chinese firms for circumventing U.S. tariffs. American solar-makers asked the administration last month to investigate whether Chinese companies were funneling solar components through the four Southeast Asian countries.
“That announcement is expected to be released in the next few weeks and it is our view that it could have a much greater impact on volumes available to be exported to the U.S. and module market prices from second half of 2024 and well into 2025,” said Edurne Zoco, an analyst at S&P Global Commodity Insights.
