China’s Booming Green Exports Face Tariff Barriers

The significant growth in China’s exports of electric vehicles (EVs), lithium batteries, and solar cells during the first four months of this year might be short-lived due to impending tariff hikes from the U.S. [para. 1]. Data from the General Administration of Customs showed that exports of passenger new-energy vehicles (NEVs) increased by 39.3% year-on-year, reaching 712,564 units, with their value rising 26.6% to $16 billion [para. 2]. Among these NEVs, pure electric cars accounted for 557,496 units, marking a 21% year-on-year increase [para. 2].

Exports of lithium-ion batteries and solar cells also saw growth, with a 3.8% and 28.1% year-on-year increase to 1.17 billion units and 4.5 million tons respectively [para. 3]. The surge in NEV exports was fueled by Chinese EV-makers like BYD Co. Ltd. and Nio Inc. as they intensified efforts to enter foreign markets amid increasing domestic competition, contributing to China becoming the world’s largest auto exporter last year [para. 4].

Despite these gains, China's global expansion in the EV market faces resistance, particularly from the Biden administration, which plans to increase tariffs on China-made EVs from 25% to 100% this year [para. 5]. This move aims to ensure American dominance in the auto industry, even though the U.S. market comprises a minor portion of Chinese EV exports [para. 5]. Additionally, tariffs on lithium-ion batteries for EVs will be raised from 7.5% to 25% by 2024, and those on non-EV lithium-ion batteries will increase by the same margin by 2026. Solar cell tariffs will double to 50% this year [para. 6].

Analysts at Nomura Holdings Inc. have cautioned that this U.S. policy might trigger a ripple effect, leading other significant EV importers like the EU and the U.K. to implement similar restrictive measures [para. 7]. The European Commission launched an investigation in October into whether Chinese EV companies are benefiting from state subsidies, potentially undercutting their EU counterparts, with possible tariff imposition before the summer break hinted by EU trade chief Valdis Dombrovskis [para. 8].

Even though the exported quantities of lithium-ion batteries and solar cells increased, their value dropped by 17.8% and 31.9% year-on-year respectively [para. 9]. This suggests that Chinese exporters are selling these products at lower prices, prompting criticism from foreign policymakers about market flooding with cheap products [para. 10].

On April 24, the American Alliance for Solar Manufacturing Trade Committee petitioned the U.S. Department of Commerce and the U.S. International Trade Commission to start anti-dumping and anti-subsidy investigations into solar products imported from Cambodia, Malaysia, Thailand, and Vietnam. The concern is that Chinese firms may be evading U.S. tariffs by relocating supply chains to these countries [para. 11]. The committee also criticized Chinese industrial policies for causing subsidization of solar products in China and Southeast Asia, resulting in market dumping and an oversupply of solar panels sold below production costs [para. 12].