Biden’s great wall of tariffs on Chinese EVS will drive West’s biggest industry into the ground

Rather than obsess over threat from east, the US should let the auto market work things out for itself

The price of a slick new BYD will double. The value of tech giant Xiaomi’s new SUV – which will sync with your phone – will go through the roof. Anyone planning to switch to an electric vehicle, who was hoping for an alternative to a Tesla, or a batterypowered Ford, will suddenly have to pay a lot more, because Joe Biden is expected to unveil massive tariffs on Chinese-made electric cars this week.

But hold on. Sure, we can all understand where the US president is coming from. China’s drive to take over this industry is gathering pace.

However, history tells us that behind tariff walls manufacturers can grow fat and lazy, selling lower quality products at higher prices. All Biden will end up doing is destroying the West’s auto industry – when it would be far better for him to simply drop the obsession with EVS and leave it to the market to lead the shift away from petrol vehicles.

It looks set to be a good week for the Tesla chief Elon Musk, as well as the senior executives at Ford and General Motors, and European car manufacturers with major operations in the US. All are facing fierce competition from Chinese EV manufacturers that include Zeekr, which floated last week with a value already above $6bn (£4.8bn), and the sleek looking new models launched by the smart-phone firm Xiaomi.

Chinese cars are aesthetically pleasing, come packed with innovative features, and are generally cheaper than anything made in the US or in Europe.

The Biden White House is this week expected to slap a punishing 100pc tariff on Chinese cars coming into the US, quadrupling the current levies. At a stroke, the competition will effectively be killed off.

Chinese manufacturers are hypercompetitive and have plenty of discrete subsidies from Beijing but it is very hard to overcome a 100pc tariff barrier and, even if they do manage to claw out a slice of the market, presumably Biden will just go up to 200pc or 300pc. He appears determined to do whatever it takes to keep China out of the market.

Presumably the UK will follow Biden’s lead and the EU is already discussing huge tariffs on Chinese EVS, which are likely to be inevitable once Biden paves the way. With this in mind, talk of a “green trade deal” once Biden secures a second term and Sir Keir Starmer is PM, feels very sinister indeed. Don’t be surprised if we are all forced to drive a battery-powered revamp of the Morris Marina, the model from the heyday of the nationalised British motor industry that is regularly voted the worst car ever made. And, this time, it might run out of charge before it turns into rust. However, with the West erecting a tariff wall to keep China out, there may be few alternatives.

This is the grim reality of our current approach to net zero. The masterminds who decided we should switch from petrol to electric cars didn’t seem to realise that the radically different technology involved would give China a route to dominate the industry. Of course, it is possible – even likely – that Chinese manufacturers are subsidised. They may also have lower costs. But the important point is this. China is making some attractive EVS, and selling them at low prices, and there is little question that customers will buy them once they come into the market over the next few years.

A $2.5trillion global industry that supports countless jobs is now at risk of moving from the West to the East. We have grown increasingly sceptical that this could be China’s century, however, if it captures the auto industry, perhaps it just might be.

Here’s the problem: massive tariffs are not the best way to respond. From American steel to European agriculture and food production, they have been shown to reduce choice and feed inefficiency while reducing wages for workers and raising prices for consumers.

As it happens, the West’s car industry of the 1960s and 1970s is perhaps the best example of that. When the Japanese manufacturers first came into the market, with cheaper, better-made cars, they posed an existential threat to the traditional giants. Eventually, they upped their game but if they had been protected by tariffs they would not have needed to, and consumers would have suffered.

There is a far better way out of this mess.

We could simply drop the obsession with electric vehicles, remain supportive of the move away from petrol and diesel but be neutral on whether the next generation of cars should be powered by batteries, hydrogen, by “green fuels” or by some other technology yet to be developed.

And, at the same time, we should leave the market completely open so that manufacturers have to compete globally to offer the best possible product at the lowest possible price. Biden is trying to protect the West’s biggest industry with his EV tariffs. He may end up destroying it instead.