White House advisor says new China tariffs safeguard US auto industry

When the Biden administration increased tariffs on some goods imported from China, the President made a point of noting the Michigan members of Congress at the official announcement.

President Joe Biden is adding a 100% tariff on electric vehicles, batteries and other materials he says the Chinese government is unfairly subsidizing.

That’s a concern in Michigan, where Biden is pushing electric vehicle technology.

His likely Republican opponent, former President Donald Trump, has also vowed to heavily tax EVs and all imports from China.

Trump also claims a focus on electric vehicles will cost U.S. autoworkers their jobs.

But the chair of the U.S. Council of Economic Advisors, Jared Bernstein, tells WDET Biden is taking a more surgical approach to applying tariffs.

Listen: White House advisor says new China tariffs safeguard US auto industry

The following interview was edited for clarity.

Jared Bernstein: I think there’s a really important distinction between us and our predecessor when it comes to electric vehicles. President Biden believes that if American workers have a level playing field, if they’re protected from unfair trade and excess dumping, they can compete with anybody in electric vehicles. We can stand up a world-class electric vehicle production sector in this country and compete with anybody on the globe. Our predecessor (the Trump administration) just doesn’t believe that. It doesn’t believe Americans can compete in the electric vehicle space. Now, one of the things that President Biden has done is not just talked about this, he’s taken action. And Michigan is a great example. You can see factories springing up in various places across the state. That includes semiconductors. And not just EV investments, but electric battery production as well. That’s part of the Inflation Reduction Act as well as the CHIPS Act. The bipartisan infrastructure was in there too, with a nationwide network of domestically-produced charging stations. All of those are investments that can be undermined if a country as large as China comes in with an agenda to heavily subsidize those products, to the point where they’re engaged in unfair price competition, blocking our ability to stand up those industries here.

Quinn Klinefelter, WDET News: Consumers often say one reason that Chinese-made electric vehicles like the Seagull, for instance, could pose a threat to the Detroit or U.S. auto industry, is because they cost so much less than those made by Detroit’s Big Three. They’ve been trying to bring the price down. You guys have offered tax credits, etc. But they’re still pretty costly. How will any tariffs help make electric vehicles more affordable or better sellers to the average consumer?

JB: You have to ask yourself why those Chinese exports cost so little. And the answer is because of a level of subsidization that goes way beyond anything we or any other advanced economies are considering. And we’ve seen this movie before. There used to be a thing called “China Shock 1.” What we’re trying to do here is to prevent China Shock 2. The first shock was one that really hollowed-out so many of our manufacturing communities. What we’re avoiding here is an excessive subsidization overcapacity play that artificially creates the kind of price differential you were just talking about. And one of the tried-and-true ways to balance out that differential is through tariffs. That’s why the President announced an increase in tariff on Chinese electric vehicles from 25% to 100%.

QK: Selling any of those vehicles that would happen to go through Mexico would also hit on the USMCA trade deal. That can be renegotiated in 2026. If you guys still have the White House at that point, would you be open to renegotiating it? And can you change it to limit sales of Chinese vehicles somehow in the U.S. without hurting the auto parts supplies or other things that Detroit’s Big Three still depend on from there?

JB: That particular hypothetical gets way ahead of anything we’re talking about right now. I’m happy to revisit it when the time is right. But what I will tell you, focusing on right now, is something that you’ve raised a couple of times that’s very much worthy of addressing. And that’s this problem of trans-shipments, Chinese exports coming in through some backdoor where they’re embedded in a country with whom we have good and fair trade relations. And the way to do that is a very important piece of this, it probably hasn’t gotten enough attention. We plan to work with our allies to prevent that kind of trans-shipment, that kind of evasion of the tariff measures were standing up. We are not making an isolation play here. Yes, of course, we’re investing deeply in American industries. And we want to stand up American domestic production. We want to have resilient American supply chains. But we also want to keep trading with our trading partners and our friends. Part of that alliance, which President Biden brings to the table and I would argue his predecessor does not, means working with our partners to make sure that we enforce these rules against China’s unfair trading practices.

QK: Have you had any response from the Mexican government as to these tariffs taking place?

JB: I don’t know that we’ve had any response on that. But we’re constantly in touch with our friends throughout the North American region, Canada and Mexico, in terms of the trade agreements we have with them, making sure that we continue to pursue fair trade. It’s kind of a model for the way this kind of thing should develop and evolve, versus (the Chinese) model based on forced technology transfers, the theft of intellectual property and essentially distorting market forces with excessive subsidization.

QK: From what I understood when you were trying to create a more domestic-based supply chain, that included not only the U.S. but also “trusted allies,” which I assume Mexico would fall into that category.

JB: Absolutely. This is in no way any kind of an isolationist play. One of the things that President Biden has long brought to the table was a willingness to work with what you call trusted allies, what I call trading partners who play it fair and down the middle. So there’s no shutting America off from the rest of the world. What there is, is making sure that our investments in key industries of the future, much of which are financed by our taxpayers, are protected against unfair trade policies that China has long employed in order to artificially gin up market share. And it really hurt our domestic producers. In the past, the political class often looked past this and said, “Well, as long as it’s cheap, we’re for it.” That’s not this president. We’re gonna do everything we can to bring down prices faced by working families. But when it comes to preserving American industry and production and key areas against unfair trade, we’re gonna fight for that.