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Four months after announcing stiff tariff hikes on imports of solar cells, electric vehicles (EV), batteries, and critical minerals originating from China, the U.S. has confirmed that the new tariff regime will take effect from September 27, 2024.
The Office of the U.S. Trade Representative (USTR) said Chinese-manufactured electric vehicles would carry a 100% tariff and solar cells a 50% tariff. A 25% tariff will apply to EV batteries, critical minerals, aluminum, and steel.
A tariff of 50% has also been proposed for polysilicon used in solar panels starting 2025.
USTR, however, adopted 14 tariff exclusions to temporarily exclude solar cell and wafer manufacturing machinery. These exclusions apply to products imported from January 1, 2024, until May 31, 2025. It also decided against going ahead with five other proposed exclusions covering solar module manufacturing equipment.
USTR said the modifications announced in May 2024 were largely adopted, with several updates to strengthen the actions to protect American businesses and workers from China’s “unfair trade practices” following the review of more than 1,100 comments from the public.
According to USTR, China now dominates the manufacturing capacity of polysilicon and wafers, accounting for 93% of polysilicon manufacturing capacity and 95% of wafer capacity. China’s dominance in the manufacturing of wafers and polysilicon could undermine new investments in domestic manufacturing, impede the resiliency of U.S. supply chains for solar cells and semiconductors, and undermine the effectiveness of the tariffs on solar cells.
As a result of its efforts to dominate the EV market, China produces 70% of the world’s electric cars—jeopardizing productive investments elsewhere, USTR noted, adding that the increase in the duties on EVs will encourage diversification from Chinese sources.
Public responses to the Section 301 proposals were supportive of the tariff increases, which are critical to counter China’s policies and practices that target the solar industry. They note that China has invested in the long-term dominance of the global solar supply chain, which has resulted in limited alternatives and increasing dependence on Chinese suppliers.
Reacting to the U.S. move, a Chinese Commerce Ministry spokesperson described the tariff increases as a typical practice of unilateralism and trade protectionism. This would seriously undermine the international trade order and the security and stability of global industrial and supply chains.
China and the U.S. have been constantly at loggerheads since the U.S. introduced the Inflation Reduction Act (IRA), under which about $370 billion would be invested in clean energy programs. China formally petitioned the World Trade Organization for dispute consultations with the U.S. regarding certain tax credits under the IRA to promote the production of EVs and renewable energy projects.
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