Just last week, the U.S. Department of Commerce announced the results of a four-year review of the Section 301 tariffs on China. The review indicates that the U.S. will increase tariffs on imports from China over the next two years. These products include electric vehicles, lithium batteries (for both electric and non-electric vehicles), photovoltaic cells, critical minerals, semiconductors, steel and aluminum, port cranes, personal protective equipment, among others.
The U.S. “Saturation” Sanctions are Imminent
In the lithium battery sector, the U.S. Department of Commerce plans to raise tariffs on Chinese electric vehicles from 25% to 100%. Tariffs on lithium-ion batteries for electric vehicles and their components will increase from 7.5% to 25% this year, while tariffs on lithium-ion batteries not used in electric vehicles will rise from 7.5% to 25% by 2026. If this policy is implemented as scheduled, it will be challenging for Chinese lithium battery manufacturers to maintain a competitive edge in the North American market. After years of trade disputes, domestic companies venturing abroad are well-acquainted with the U.S.'s double standards in foreign trade, especially those in the new energy sector. During Trump’s administration, the U.S. Department of Commerce imposed tariffs on various Chinese industrial parts to rejuvenate the American industrial supply chain. However, this policy faced strong opposition from major car manufacturers such as Tesla, Ford, Volvo, and Mercedes-Benz, who even sued the Trump administration in the U.S. Supreme Court.
Although the federal court ruled that Trump’s executive order was illegal, it did not deter the U.S. government from continuing to implement various policies targeting Chinese manufacturing, a trend that persisted into Biden’s administration. Particularly in the second half of 2024, as the Democrats and Republicans began preparing for the next government election, they sought to secure more votes by stabilizing their voter base and appealing to each other's supporters. In the past decade, the Democratic Party’s base has comprised people of color, tech elites from Silicon Valley and Wall Street, new money, and media operators. Since Trump’s rise, the Republican base has increasingly included the working class, even surpassing the influence of the “old money.” While the dominance of the “white left” is a carefully curated atmosphere by the elites, it is evident that the Republican Party has high political expectations for this “disenchanted” group.
Clearly, the Democratic Party is also trying to win over this group of new and old disgruntled voters. For American politicians who are used to opportunistically shifting positions for profit, finding a common enemy and diverting attention from development and stance contradictions is an effective political strategy. Faced with the disillusionment of the American working class due to the decline of the industrial system, both parties naturally seek a scapegoat to obscure the fundamental reality that America serves only its capitalists. Along with the industrial shift, the responsibility for industrial decline has also been shifted, with China, as the greatest beneficiary of global industrial transfer in the past 20 years, being the obvious scapegoat.
In the face of the upcoming election, the Democratic Party chose to portray China as causing the decline of the U.S. industrial system through unfair competition, attempting to gain favor and votes from the working class by creating industrial conflict between China and the U.S. Consequently, whether it's electric vehicles, lithium batteries, lighters, or screws, giving up illusions, facing reality, and focusing on improving oneself are the fundamental strategies for domestic enterprises going abroad.
The EU Implements “Saturation” Restriction Legislation
In contrast to the U.S.'s overt double standards, the EU’s trade policies appear to be much more rational and justified. In February of this year, the EU introduced the world's first regional policy making carbon footprint a mandatory standard for products—the “EU Battery and Waste Battery Directive.” The directive stipulates that electric vehicle batteries with a capacity of more than 2 kWh must provide a carbon footprint declaration. If the carbon footprint exceeds the EU’s threshold (not yet specified), the batteries will be banned from entering the EU market. This policy will officially take effect on February 18th next year. Enterprises outside the EU initially thought they could safely meet the requirements by calculating their carbon footprint and using power purchase agreements (PPA) or purchasing green certificates (ERC). However, the EU recently introduced a supplementary directive with a clear logic, requiring detailed production information for each imported battery and specifying the power sources used in production. The directive includes two models for calculating the carbon footprint of battery production: the national average electricity consumption mix carbon footprint data and the direct power connection carbon footprint data.
To explain briefly, the national average electricity consumption mix carbon footprint refers to the average carbon footprint of the entire grid in the battery-producing country. For example, if 80% of a country’s power supply comes from coal and the remaining 20% from renewable sources, the national average electricity consumption mix carbon footprint data will be poor, and the EU will “refuse to accept” batteries produced in that country. Based on this policy, the current top ten industrial countries by manufacturing scale globally would all be excluded. Single-source clean energy is not yet sufficient to support the long-term sustainable development of any major industrial nation. Perhaps for this reason, the EU has a second standard—direct power connection carbon footprint. This essentially assesses whether the power directly connected to the lithium battery production enterprise is environmentally friendly.
There are two scenarios here. If an enterprise is connected to the national grid, this standard becomes the previous one; thus, the only practically feasible power system standard is a zero-carbon factory’s “green power direct supply.” For example, dense rooftop photovoltaic panels can supplement the main power for production lines.
These two standards are already challenging for domestic lithium battery enterprises, let alone their practical implementation. On one hand, as a populous and industrialized nation, China’s diversified energy development strategy is fundamental national policy to minimize the risks of energy supply instability affecting life and production. Single-source renewable energy is not yet adequate to meet China’s massive energy development needs. On the other hand, the self-sufficient green power system in factory areas is still in a small-scale pilot stage, with immature models and insufficient wind and solar resources in many regions to support the basic development needs of a green power system. In conclusion, it is clear that while the U.S. and EU are “unprecedented” in their actions, their rationale is similarly untenable. The two allies are attacking from all fronts, aiming to build their own complete battery manufacturing systems and reshape the global battery industry chain. In the quest for development and survival, the new political correctness in the U.S. and EU battery or manufacturing industry is “sacrificing others to save oneself.” To break this deadlock, it seems the only solution is to fight fire with fire.
Author: Lithium Voice
Link：https://mp.weixin.qq.com/s/5c1BFzKeb9JlhkhqJXI1GA