Now is a terrible time for a nanny tax on electric vehicles
In an amazing turn of events, according to news reports, the Biden White House is exploring the possibility of raising the prices Americans pay for Chinese-made electric vehicles.
EVs, of course, are the type of automobile the administration would otherwise prefer that we Americans buy. Included in this new policy would be shipments from Tesla’s Shanghai plant and vehicles produced in Chinese-owned plants located in Mexico.
Chinese EVs — like it or not, an integral part of the market for environmentally friendly vehicles — are already subject to a 25 percent tariff. Now, the talk has turned to an additional border tax, no matter where such vehicles are produced, or which company makes them.
If releasing this information was a trial balloon for the public’s reaction, it should be shot down with shouts of hallelujah.
Why pick a time like this, when the Fed’s preferred inflation gauge is finally giving ground, to kick the shins of American consumers who’d like to reduce their carbon footprints willingly? Is this really a situation where we need to be prodded by a national nanny?
Directing what Americans buy with their hard-earned cash, an idea and policies that were pushed forward by President Trump and his many tariffs (with promises of more of the same if he’s reelected) and later continued by the Biden team, is a counterproductive idea that should be relegated to the dust bins of history.
Some might argue that stifling the sale of electric vehicles that are all or partly Chinese in origin and moving related production to the United States will bring some needed climate change benefits. After all, China produces lots of CO2 emissions. But the resulting pollution could arguably be worse in America. According to 2022 data, per capita production of U.S. carbon emissions stood at 14.9 metric tons. The same measure for China was considerably less, at 8.0 metric tons.
If the Biden team wants to make EV production cleaner, why not give some leeway to trusted trading partners Japan, where per capita CO2 emissions were 8.6 metric tons, or South Korea and its 11.9 metric tons? Or, even better, to Mexico, which hits a low of only 3.2 metric tons per capita? It’s a complicated topic, but what we seem to know about climate science does not support the current Biden EV thinking.
No, the search for answers should take us elsewhere. If you’re wondering why our leaders want to make readily available EVs more expensive and allow domestic producers to relax rather than strive to make EVs that more people will want to buy, consider the usual suspect: election-season politics.
It’s most likely not a simple coincidence that the conversation is taking place when both EV sales by the traditional U.S. automakers and the sitting president’s approval ratings are headed south.
General Motors is abandoning a notable driverless electric vehicle initiative and buying out almost half of its Buick dealerships that refuse to go electric. Previously announced U.S. production of electric batteries is being postponed. Despite massive taxpayer-funded incentives to buy electric cars and government assistance for related battery production, the Biden electric vehicle industrial policy has not worked.
None of this means that we need to doubt the sincerity of White House officials. Good intentions don’t always translate to good ideas. But we should never treat the fact that domestic companies and their swing-state workforces tend to win out in election season as some kind of fluke.
Once again, it seems, the United Auto Workers and the leadership of EV-challenged domestic automobile producers are sitting in the political catbird seat.
Bruce Yandle is a distinguished adjunct fellow with the Mercatus Center at George Mason University and dean emeritus of Clemson University’s College of Business and Behavioral Sciences.