Incoming US President Donald Trump is set to harden his stance on China, specifically with an eye on electric vehicle (EV) and critical mineral supply chains.
Trump’s transition team is recommending to strengthen measures blocking cars, components and battery materials from China, according to a document seen by Reuters.
The transition-team is also looking to redirect federal money currently flowing to building charging stations and making EVs affordable into national-defence priorities, including securing China-free supplies of batteries and the critical minerals to build them.
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While batteries, minerals and other EV components are “critical to defense production,” electric vehicles “and charging stations are not,” the document says.
The moves are part of a larger plan by the US president-elect’s transition team to make sweeping changes to the outgoing Joe Biden’s government’s ambitious EV transition plan.
The recommendations are a stark departure from the Biden administration’s policy, which sought to balance encouraging a domestic battery supply chain, separate from China, with a rapid EV transition.
Many of the transition-team proposals appear aimed at encouraging domestic battery production, primarily for defence-related interests. Others appear aimed at protecting automakers, even those producing EVs, in the United States.
As part of that effort the transition team recommends imposing tariffs on all battery materials globally, and then negotiating individual exemptions with allies.
The team proposes Instituting tariffs on “EV supply chain” imports including batteries, critical minerals and charging components. It said the administration should use Section 232 tariffs, which target national security threats, to limit imports of such products.
The products will include lithium-ion batteries, graphite and “permanent magnets” used in EV motors and military applications.
Bumps for Korea too
The proposals came from a Trump transition team charged with crafting a strategy for swift implementation of new automotive policies.
The team also calls for eliminating the Biden administration’s $7,500 tax credit for consumer EV purchases.
The policies could strike a blow to US EV sales and production at a time when many legacy automakers, including General Motors and South Korea’s Hyundai have recently introduced a wider array of electric offerings to the US market.
A rollback of Biden’s policies will especially hurt Korea, which has become the biggest investor in the US, primarily targeting the EV transition.
Biden, under his Inflation Reduction Act (IRA), has channelled billions of dollars toward a clean energy transition and Korean carmakers and battery firms have been some of the biggest recipients of those subsidies.
That push has meant that Korea has invested a whopping $56 billion in the US during Biden’s term, according to data quoted by newspaper Korea JoongAng Daily.
Trump has also promised to impose 10-20% tariffs on imported vehicles, which will further hurt Korea. According to the Korea Economic Daily (KED), the US accounted for 47.3% of Korea’s total vehicle exports last year. The value of those exports stood at $108.2 billion.
If imposed, those tariffs would cost Hyundai and Kia an additional $286 million and $143 million a month, respectively, KED said.
Climate takes a backseat
Aside from cutting government EV support, the transition team recommendations would also allow automakers to produce more gas-powered vehicles.
The team wants to roll back emissions and fuel-economy standards championed by the Biden administration back to 2019 levels.
That would allow an average of about 25% more emissions per vehicle mile than the current 2025 limits and average fuel economy to be about 15% lower.
The proposal also recommends blocking California from setting its own, stricter vehicle-emissions standards, which more than a dozen other states have adopted. Trump barred California from setting tougher requirements during his first term, a policy that Biden reversed.
Trump transition spokeswoman Karoline Leavitt said voters gave Trump a mandate to deliver on campaign promises, including stopping government attacks on gas-powered cars.
“When he takes office, President Trump will support the auto industry, allowing space for both gas-powered cars and electric vehicles,” Leavitt said in a statement.
- Reuters, with additional editing and inputs from Vishakha Saxena
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