America Is Losing the Green Tech Race to China
On May 14, President Biden announced a major escalation of the country’s emerging climate trade war with China, raising existing tariffs on Chinese electric vehicles to 100 percent — a unilateral quadrupling. A few days earlier, responding to reports of Biden’s plans, Donald Trump outdid him, promising tariffs of 200 percent should he win the 2024 election.
It’s not just E.V.s. Five years after blasting Trump for imposing tariffs on Chinese exports, Biden raised them — on aluminum, steel, lithium batteries, solar cells and semiconductors, among other products. Trade protections of this scope would have been almost unthinkable even half a generation ago, when free markets were largely seen by leaders of both parties as opportunities to exploit and tariffs were regarded as an expression of hostile desperation by weak, developingnations. And tariffs would have been perhaps even harder to imagine then in pursuit of global climate goals, which had always called to mind not zero-sum economic competition but virtuous visions of “Kumbaya” cooperation and even global governance in the name of Gaia.
But since Trump’s election in 2016, chastened Democratic policymakers have come to see green industrial policy as a kind of one-size-fits-all, policy-and-politics tool — a recipe for addressing the climate crisis, yes, but also for the postindustrial “secular stagnation” of the U.S. economy, for the domestic manufacturing decline, for white working-class resentment and for the geopolitical challenge posed by China. Trade protectionism is now perhaps the closest thing we have to a bipartisan consensus in Washington, but sometimes all those goals sit at cross purposes. “There are few things that would decarbonize the U.S. faster than $20,000 E.V.s,” the M.I.T. economics professor David Autor recently said. “But there is probably nothing that would kill the U.S. auto industry faster, either.” And BYD, a Chinese automaker, just rolled out a model priced under $10,000.
Play a word-association game for “E.V.,” and an American is most likely to say “Tesla” first, but these days it would be better to say “China,” so astonishing has been the growth of the country’s electric-vehicle sector. In 2019, Chinese E.V. exports totaled $400 million; by 2023, they had reached $34 billion, a precipitous 85-fold increase and enough to help make the country, as recently as five years ago an afterthought in global auto exports, today the world’s top exporter of all cars. Nearly 60 percent of all the world’s E.V.s are now sold in China, which is home to three of the world’s four biggest E.V. manufacturers. In late 2023, BYD moved briefly into the top spot, shortly before Tesla issued a mass recall of its Cybertruck and reportedly canceled its plans for an affordable sedan.
At present, there are hardly any Chinese-manufactured E.V.s even available for sale in the United States, which makes the back and forth over tariffs look pretty performative in the short term. (Symbolically, it has got to be reassuring to American autoworkers, a key swing-state constituency.) But cast your eyes a little deeper into the future, and E.V. protectionism looks less like a market tweak, designed to even the playing field for American automakers, than a market wall. It’s designed to keep Chinese exports entirely out of the United States, at least while the huge industrial stimulus of the Inflation Reduction Act kicks in, and to protect domestic manufacturers from the competition of cars that might be half as expensive or twice as appealing through years in which the country is meant to be transitioning rapidly. (E.V.s are supposed to be half of all new car sales by 2030, according to the White House, up from 7.6 percent last year.)
Biden wagered an awful lot of first-term political capital on a new green industrial policy, which allocated more than $2 trillion in spending on the climate-focused I.R.A. and the climate-inflected infrastructure law and CHIPS Act. Now, toward the end of his term, he is trying to build a protective moat around America’s budding green industries. From the outside, it looks like a genuine climate trade war. Can it even be won?
