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Biden’s Climate Agenda Is Running Headfirst Into A Wall Of His Own Making

Published

11 months ago

9 minute read

From the Daily Caller News Foundation

By WILL KESSLER

 

President Joe Biden’s administration unveiled tariffs this week aimed at boosting domestic production of green energy technology, but the move could end up hamstringing his larger climate goals.

The tariffs announced on Tuesday quadruple levies for Chinese electric vehicles (EVs) to 100% and raise rates for certain Chinese green energy and EV components like minerals and batteries. Biden has made the transition to green energy and EVs a key part of his climate agenda, but hiking tariffs on those products to help U.S. manufacturing could jack up prices on the already costly products, slowing adoption by struggling Americans, according to experts who spoke to the DCNF.

The risks posed by hiking levies on green technology expose the inherent tension between Biden’s climate agenda and his efforts to protect American industry, which often struggles to compete with cheap foreign labor. Items on his climate agenda typically raise costs, and requiring companies to comply could make them uncompetitive on the world stage.

“These tariffs are a classic example of the Biden administration’s left hand not knowing what the right hand is doing,” E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the DCNF. “The inability to import Chinese-made EVs due to prohibitively high costs will necessitate importing raw materials and parts for EVs from China. Since automakers can’t afford to build and assemble the vehicles here, prices will have to rise. In other words, American consumers will pay the cost of this tariff, not the Chinese.”

The White House, in its fact sheet, pointed to China artificially lowering its prices and dumping goods on the global market as the justification for the new tariffs in an effort to help protect American businesses. China has pumped huge subsidies into its own EV industry and supply lines over the past few years, spawning a European Union investigation into vehicles from the country.

“Tariffs on Chinese EVs won’t just make Chinese EVs more expensive, they will also make American EVs more expensive,” Ryan Young, senior economist at the Competitive Enterprise Institute, told the DCNF. “This is because domestic producers can now raise their prices without fear of being undercut by competitors. Good for them but bad for consumers — and for the Biden administration’s policy goal of increased EV adoption.”

Several American manufacturers are already struggling to sell EVs at a profit, with Ford losing $4.7 billion on its electric line in 2023 while selling over 72,000 of the vehicles. To ease price concerns and increase EV adoption, the Biden administration created an EV tax credit of $7,500 per vehicle, depending on where its parts are made.

The market share of EVs out of all vehicles fell in the first quarter of 2024 from 7.6% to 7.1% as consumers opted to buy cheaper traditional vehicles instead. Growth in EV sales increased by just 2.7% in the quarter, far slower than the 47% growth that the industry saw in all of 2023.

The Biden administration has also sought to use regulations to push automakers toward electrifying their offerings as consumers refuse to voluntarily adopt EVs, finalizing rules in March that effectively require around 67% of all light-duty vehicles sold after 2032 to be electric or hybrids.

“By raising the price — and thereby stunting the deployment — of EVs, the tariffs undermine the Biden administration’s stated goals of reducing carbon emissions (as many U.S. environmentalists and EV fans have recently lamented),” Clark Packard, research fellow in the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute, wrote following the announcement. “The EV tariffs (and also-​announced solar tariffs) would continue the administration’s habit of choosing politics and protectionism over their environmental agenda.”

Despite the subsidies, the 25% tariff that is currently in place for Chinese EVs already prices the product out of the U.S. market, resulting in no Chinese-branded EVs being sold in the country, according to Barron’s. Only a handful of the more than 100 EV models being sold in China appeal to American consumers, and none of them can compete under current levies.

“Something like this happened just a few years ago when former president Donald Trump enacted 25% steel tariffs in 2018,” Young told the DCNF. “Domestic steel producers raised their prices by almost exactly the amount of the tariff, and America soon had the world’s highest steel prices. As a result, car prices went up by about $200 to $300 on average. Larger trucks with more steel content increased even more. Now Biden is going to do the same thing to EVs.”

In the year following the increase in steel tariffs under the Trump administration, U.S. Steel’s operating profit rose 38%, prices were hiked 5 to 10% and revenue was up 15% due to reduced competition, according to CNN.

Despite the massive tariff hike on EVs, Biden only raised the tariff rate on Chinese lithium-ion EV batteries and battery parts to 25%, according to the White House. The tariff rate on certain essential minerals, like natural graphite, was also hiked to just 25%.

“Despite rapid and recent progress in U.S. onshoring, China currently controls over 80% of certain segments of the EV battery supply chain, particularly upstream nodes such as critical minerals mining, processing, and refining,” the White House wrote in its fact sheet. “Concentration of critical minerals mining and refining capacity in China leaves our supply chains vulnerable and our national security and clean energy goals at risk.”

China has broad control over the majority of minerals necessary to construct EVs, possessing nearly 90% of the world’s mineral refining capacity. Sources of the required minerals often also have serious human rights concerns, such as the world’s supply of cobalt, which has widespread ties to child labor.

Biden attacked former President Donald Trump during the 2020 election for the broad tariffs that he put on Chinese goods, noting that “any freshman econ student” could point out that the costs of the tariffs would be passed on to American consumers.

EV makers have increasingly struggled over the past year to maintain profits amid stalling demand, with the largest American EV manufacturer, Tesla, reporting a 10% drop in year-over-year revenue in the first quarter of 2024. Tesla is one of several EV makers that have announced layoffs in recent months.

“Fortunately, the EV market is still small in the U.S. and Chinese EVs are an even smaller slice of that small pie,” Antoni told the DCNF. “Even if the EV market in the U.S. were large, these tariffs would not help the domestic EV industry. While consumer demand for EVs would shift to domestic models, an increase in domestic production would rely on very expensive inputs from China, cutting into profits.”

The White House did not respond to a request to comment from the DCNF.

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Automotive

Electric cars just another poor climate policy

Published on April 1, 2025

By

From the Fraser Institute

By Bjørn Lomborg

The electric car is widely seen as a symbol of a simple, clean solution to climate change. In reality, it’s inefficient, reliant on massive subsidies, and leaves behind a trail of pollution and death that is seldom acknowledged.

We are constantly reminded by climate activists and politicians that electric cars are cleaner, cheaper, and better. Canada and many other countries have promised to prohibit the sale of new gas and diesel cars within a decade. But if electric cars are really so good, why would we need to ban the alternatives?

And why has Canada needed to subsidize each electric car with a minimum $5,000 from the federal government and more from provincial governments to get them bought? Many people are not sold on the idea of an electric car because they worry about having to plan out where and when to recharge. They don’t want to wait for an uncomfortable amount of time while recharging; they don’t want to pay significantly more for the electric car and then see its used-car value decline much faster. For people not privileged to own their own house, recharging is a real challenge. Surveys show that only 15 per cent of Canadians and 11 per cent of Americans want to buy an electric car.

The main environmental selling point of an electric car is that it doesn’t pollute. It is true that its engine doesn’t produce any CO₂ while driving, but it still emits carbon in other ways. Manufacturing the car generates emissions—especially producing the battery which requires a large amount of energy, mostly achieved with coal in China. So even when an electric car is being recharged with clean power in BC, over its lifetime it will emit about one-third of an equivalent gasoline car. When recharged in Alberta, it will emit almost three-quarters.

In some parts of the world, like India, so much of the power comes from coal that electric cars end up emitting more CO₂ than gasoline cars. Across the world, on average, the International Energy Agency estimates that an electric car using the global average mix of power sources over its lifetime will emit nearly half as much CO₂ as a gasoline-driven car, saving about 22 tonnes of CO₂.

But using an electric car to cut emissions is incredibly ineffective. On America’s longest-established carbon trading system, you could buy 22 tonnes of carbon emission cuts for about $660 (US$460). Yet, Ottawa is subsidizing every electric car to the tune of $5,000 or nearly ten times as much, which increases even more if provincial subsidies are included. And since about half of those electrical vehicles would have been bought anyway, it is likely that Canada has spent nearly twenty-times too much cutting CO₂ with electric cars than it could have. To put it differently, Canada could have cut twenty-times more CO₂ for the same amount of money.

Moreover, all these estimates assume that electric cars are driven as far as gasoline cars. They are not. In the US, nine-in-ten households with an electric car actually have one, two or more non-electric cars, with most including an SUV, truck or minivan. Moreover, the electric car is usually driven less than half as much as the other vehicles, which means the CO₂ emission reduction is much smaller. Subsidized electric cars are typically a ‘second’ car for rich people to show off their environmental credentials.

Electric cars are also 320–440 kilograms heavier than equivalent gasoline cars because of their enormous batteries. This means they will wear down roads faster, and cost societies more. They will also cause more air pollution by shredding more particulates from tire and road wear along with their brakes. Now, gasoline cars also pollute through combustion, but electric cars in total pollute more, both from tire and road wear and from forcing more power stations online, often the most polluting ones. The latest meta-study shows that overall electric cars are worse on particulate air pollution. Another study found that in two-thirds of US states, electric cars cause more of the most dangerous particulate air pollution than gasoline-powered cars.

These heavy electric cars are also more dangerous when involved in accidents, because heavy cars more often kill the other party. A study in Nature shows that in total, heavier electric cars will cause so many more deaths that the toll could outweigh the total climate benefits from reduced CO₂ emissions.

Many pundits suggest electric car sales will dominate gasoline cars within a few decades, but the reality is starkly different. A 2023-estimate from the Biden Administration shows that even in 2050, more than two-thirds of all cars globally will still be powered by gas or diesel.

Source: US Energy Information Administration, reference scenario, October 2023
Fossil fuel cars, vast majority is gasoline, also some diesel, all light duty vehicles, the remaining % is mostly LPG.

Electric vehicles will only take over when innovation has made them better and cheaper for real. For now, electric cars run not mostly on electricity but on bad policy and subsidies, costing hundreds of billions of dollars, blocking consumers from choosing the cars they want, and achieving virtually nothing for climate change.

Bjørn Lomborg

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Automotive

Trump warns U.S. automakers: Do not raise prices in response to tariffs

Published on March 29, 2025

By

MXM logo MxM News

Quick Hit:

Former President Donald Trump warned automakers not to raise car prices in response to newly imposed tariffs, arguing that the move would ultimately benefit the industry by strengthening American manufacturing. However, automakers are signaling that price increases may be unavoidable.

Key Details:

  • Trump told auto executives on a recent call that his administration would look unfavorably on price hikes due to tariffs.
  • A 25% tariff on imported vehicles and parts is set to take effect on April 2, likely driving up costs for U.S. automakers.
  • Industry analysts predict vehicle prices could rise 11% to 12% in response, despite Trump’s insistence that tariffs will benefit American manufacturing.

Diving Deeper:

In a conference call with leading automakers earlier this month, former President Donald Trump issued a stern warning: do not use his new tariffs as an excuse to raise car prices. While Trump presented the tariffs as a boon for American manufacturing, industry leaders remain unconvinced, arguing that the financial burden will inevitably lead to higher costs for consumers.

Trump’s administration is pressing ahead with a 25% tariff on all imported vehicles and parts, set to take effect on April 2. The move is aimed at reshaping trade dynamics in the auto industry, encouraging domestic manufacturing, and reversing what Trump calls the damaging effects of President Joe Biden’s electric vehicle mandates. Despite this, automakers say that rising costs on foreign parts—which many depend on—will leave them little choice but to pass expenses onto consumers.

“You’re going to see prices going down, but going to go down specifically because they’re going to buy what we’re doing, incentivizing companies to—and even countries—companies to come into America,” Trump stated at a recent event, reinforcing his stance that the tariffs will ultimately lower costs in the long run.

However, industry insiders are pushing back, warning that a rapid shift to domestic production is unrealistic. “Tariffs, at any level, cannot be offset or absorbed,” said Ray Scott, CEO of Lear, a major automotive parts supplier. His concern reflects broader anxieties within the industry, as automakers calculate the financial strain of the tariffs. Analysts at Morgan Stanley estimate that vehicle prices could increase between 11% and 12% in the coming months as the new tariffs take effect.

Automakers have been bracing for the fallout. Detroit’s major manufacturers and industry suppliers have voiced their concerns, emphasizing that transitioning supply chains and manufacturing operations back to the U.S. will take years. Meanwhile, auto retailers have stocked up on inventory, temporarily shielding consumers from price hikes. But once that supply runs low—likely by May—the full impact of the tariffs could hit.

Within the Trump administration, inflation remains a pressing concern, though Trump himself rarely discusses it publicly. His economic team is aware of the potential for tariffs to drive up costs, yet the administration’s stance remains firm: automakers must adapt without raising prices. It remains unclear, however, what actions Trump might take should automakers defy his warning.

The auto industry isn’t alone in its concerns. Executives across multiple sectors, from oil and gas to food manufacturing, have been lobbying against major tariffs, arguing that they will inevitably result in higher prices for American consumers. While Trump has largely dismissed these warnings, some analysts suggest that public dissatisfaction with rising costs played a key role in shaping the outcome of the 2024 election.

With the tariffs set to take effect in just weeks, automakers are left grappling with a difficult reality: absorb billions in new costs or risk the ire of a White House determined to remake America’s trade policies.

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