On Tuesday, the Chinese government lodged a formal complaint against the United States government with the World Trade Organization, claiming the Inflation Reduction Act—signed by President Joe Biden in 2022—inappropriately excludes electric cars with Chinese components from the law’s tax credit program.
Biden should be thrilled.
Donald Trump has been trying to turn Biden’s electric vehicle strategy into a political liability, using absurdly violent language to argue it will destroy the American auto industry.
However, China does not feel that way, as evidenced by its hypocritical WTO move. (China, of course, has heavily subsidized its own electric vehicle industry.) Biden can now more easily frame his policy as the best way to help American automakers survive rapidly intensifying competition from their Chinese counterparts.
The politics of electric cars are tricky. On one hand, aggressive action to address climate change can help boost young voter turnout and accelerate a leftward shift of college-educated voters that has had electoral consequences. As Charlie Mahtesian explained last year for Politico, highly educated voters have been moving into college towns in purple states. Many of them are not registered Democrats yet are “environmentally conscious [and] closely attuned to climate change issues.”
On the other hand, voters who are older, less urban, and more working-class are largely not interested in electric vehicles. They may resent seeing federal subsidies go in the pockets of relatively wealthy Tesla owners. And they may believe the spin from Trump and other Republicans that Biden’s new regulations will push gas-powered cars out of the dealership lot and force them to buy electric cars they don’t want and can’t afford. Last July, Ruy Teixeira of the American Enterprise Institute argued that Biden’s support for electric vehicles was his political “Achilles’ Heel,” citing Pew Research Center survey data showing “59 percent oppose a 2035 limit on new gasoline cars and trucks” and only 15 percent are very likely to “seriously consider” purchasing an electric vehicle for their next car.
For months last year, the United Auto Workers withheld from endorsing a presidential candidate because, in the words of union president Shawn Fain, “The federal government is pouring billions into the electric vehicle transition, with no strings attached and no commitment to workers. The EV transition is at serious risk of becoming a race to the bottom.”
In the fall, the UAW went on strike against the “Big Three” automakers—General Motors, Ford, and Stellantis—in part because of concerns that electric vehicles require less labor and battery manufacturing plants would not be unionized. Sensing an opening to drive a wedge between Biden and union workers, Trump openly pursued the UAW endorsement, while arguing “we should not be forcing consumers to buy electric vehicles they don’t want to buy.”
Biden went farther to win UAW support by visiting the picket line and publicly siding with the union’s demands. The resolutions with General Motors and Stellantis included provisions for all battery plant workers to be covered by company-wide “master agreements” with the union, while the agreement with Ford allows for battery plant workers for a planned facility in Marshall, Michigan to be covered.
In turn, Biden won the UAW endorsement, and Fain is positive about a “just transition” to electric vehicles that doesn’t leave workers behind.
And now when Trump rails against highfalutin electric vehicles, he has to somehow pin the blame on the blue-collar populists of the UAW. At a rally in Ohio this month, Trump said, “if you look at the United Auto Workers, what they’ve done to their people is horrible. They want to do this all-electric nonsense where the cars don’t go far. They cost too much. And they’re all made in China.”
This is gobbledygook. Auto workers have no interest in putting themselves out of work. And if electric cars are so terrible and no one wants them, it wouldn’t matter if China made them.
Corey Cantor, the senior associate for electric vehicles at BloombergNEF, told me that American auto companies have an existential need to crack the EV market. “Automakers are competing for a growing share of not only US EV sales but a global market that only continues to expand,” he said. “Those who wait too long or fail to execute will be left competing over a shrinking piece of the US new car sales.”
Trump, in fact, understands that China’s leading electric vehicle company BYD makes cars people want to buy and can afford to buy. According to a Foreign Policy article titled, “China’s Global EV Domination Is Just Beginning,” in Great Britain, Chinese-made EVs are projected to go for as little as 15,000 pounds, or $19,000 in US dollars. For Chinese consumers, the lowest priced BYD costs 69,800 renminbi, or $9,700 in US currency.
That’s why at that Ohio rally, right before Trump said, “if I don’t get elected, it’s gonna be a bloodbath,” he pledged to prevent China from building cars in Mexico then selling them to Americans: “Let me tell you something to China … We’re going to put a 100 percent tariff on every single car that comes across the line, and you’re not going to be able to sell those cars.”
Sounds tough. We already have a 27.5 percent tariff on Chinese-made cars, set by the Trump administration and kept by the Biden administration. China-owned factories in Mexico in theory could evade the tariff, but Politico noted, “the U.S.-Mexico-Canada Agreement contains sourcing restrictions that could pose a difficult bar for BYD to meet.”
However, with BYD making cars so cheaply, any tariff is more like a finger in the dyke. One American auto executive anonymously told Politico that because the average price gap between similar Chinese and American-made electric vehicles is as high as 179 percent, “Tariffs alone aren’t going to take care of that.”
Robinson Meyer, a New York Times climate columnist, noted recently that another Chinese automaker, Geely, is going to sell an electric Volvo SUV (yes, China owns Volvo now) in the United States for $35,000, which would beat the price of similar American-made vehicles despite the existing tariff.
Biden’s latest move to help American automakers survive in this changing market, announced earlier this month, is a new Environmental Protection Agency regulation reducing the amount of average tailpipe emissions an automaker’s fleet can produce. The rules give automakers flexibility in how they comply, but the expectation is that by 2032 a majority of newly built cars and light trucks will be EVs or hybrids.
Predictably, conservatives are falsely insinuating that the new rules amount to a flat ban on gas-guzzlers. “Biden is Coming For Your Truck,” charged Wall Street Journal columnist Kimberly Strassel. The Republican-led House Energy and Committee in February issued a statement claiming, “President Biden and Democrats are leading a radical rush-to-green agenda that takes away people’s vehicle choice and forces Americans to drive electric vehicles.”
Biden, however, isn’t taking away anyone’s existing vehicle and isn’t banning any purchases of gas-powered cars. He’s partnering with American automakers to help them adapt to a rapidly changing market and compete with Chinese companies who would otherwise obliterate them.
And he’s using a multi-faceted strategy, involving subsidies, tariffs, investment in electric-charger infrastructure, and tougher emission standards, but not ham-fisted bans.
“There are real challenges for the US market, mainly reducing the upfront cost of those EVs to reach a wider consumer base and building enough reliable charging infrastructure to lessen charging anxiety for potential buyers,” Cantor told me. But helpfully, “laws like the Inflation Reduction Act encourage not only automakers to on-shore to North America to gain access to the $7,500 credit, but reorient their EV supply chain to lessen reliance on China,” he said.
In his New York Times column, Meyer argued that tariffs are helpful in the short run to save American companies from drowning in a “a wave of cheap cars” before they better positioned to compete with China. But he cautions that “permanent” tariffs would disincentivize adaptation.
That’s a lot to explain, and as the saying goes, if you’re explaining, you’re losing. But Biden doesn’t have to explain every facet of his policy. He needs to show that he’s on the side of American manufacturers.
He can lean on the UAW’s Fain to show that auto workers are on board with the electric vehicle transition. He can tie his electric vehicle policies to his message touting American’s manufacturing comeback. As he said in his State of the Union address, we have “800,000 new manufacturing jobs in America and counting” on his watch, and “my policies have attracted $650 billion of private sector investments in clean energy and advanced manufacturing, creating tens of thousands of jobs here in America.”
On the campaign trail, he can point to what Republican consultant Mike Murphy, who leads the pro-electric EV Politics Project, has calculated: 88 percent of federal investment in electric vehicles has gone to the key battleground states of Arizona, Georgia, Michigan, North Carolina, and Nevada.
And this week, Biden just got a little more help from an unsuspecting source. He can cite China’s opposition to his made-in-America electric vehicle subsidies as proof that China knows Biden’s policies are powerful tools that strengthen American competitiveness.
Most fundamentally, Biden can use electric vehicles to draw a stark contrast between himself and Trump.
Asked about his age on Late Night with Seth Meyers, Biden said, cuttingly, “it’s about how old your ideas are.” Electric vehicle policy crystallizes that point. Biden—who often says, “We are the United States of America and there is nothing, nothing, beyond our capacity when we act together”—believes American auto companies can win by embracing the new. Trump, despite awareness of China’s rapid advancements in auto technology, wants American automakers to cling to the old.
Which is no surprise. In business, Trump was no innovator–except for innovating ways to avoid taxes and defraud banks. (His one attempt to make money in a transportation industry, the Trump Shuttle airline, tanked after three years.) In politics, Trump only knows how to exploit the fear of the future and fear of change.
Sometimes fear of the future is a political winner. But it’s not the way that Biden can win, because it’s not who he is, it’s not what the Democratic Party is, and it’s not what America needs.
