Each the Biden and Trump administrations have aimed to scale back US reliance on Chinese language-made autos, however their methods diverge considerably when it comes to supporting the expansion of the EV manufacturing from US automakers.
The continued US-China commerce warfare is ready to negatively impression the US EV market, significantly because of the heavy dependence on Chinese language imports like lithium-ion batteries.
US EV producers already wrestle to maintain up with cost-competitive Chinese language EVs when it comes to international gross sales, nevertheless it’s Trump’s broader rollback of EV-friendly insurance policies that poses the largest menace to future home gross sales.
Each the Biden and Trump administrations have shared a typical goal: lowering america’ dependence on foreign-made autos, significantly from China, to guard home producers and bolster native manufacturing.
In 2024, the Biden administration imposed a 100% tariff on Chinese language EVs and a 25% tariff on lithium-ion EV batteries. The intention was to safeguard US manufacturing whereas accelerating the decoupling from Chinese language provide chains. Biden’s imaginative and prescient was not solely about lowering international reliance but additionally making certain that the US might proceed to fabricate EVs at scale. For instance, Biden’s Administration set an formidable objective that fifty% of all new autos bought within the US by 2030 can be battery electrical autos (BEVs).
To attain this objective, the Biden Administration targeted on infrastructure growth, allocating $5bn beneath the Nationwide Electrical Automobile Infrastructure (NEVI) Components Program to construct a nationwide community of 500,000 high-speed EV charging stations by 2030, but additionally strengthening the home battery manufacturing sector. Actually, in September 2024, the US DoE introduced over $3bn in funding for 25 initiatives throughout 14 states, aiming to reinforce the manufacturing of superior batteries and battery supplies, with awardees together with main corporations resembling Honeywell.
This plan has confronted vital setbacks beneath the brand new administration. Whereas persevering with the decoupling from Chinese language provide chains, President Trump not too long ago imposed a 145% tariff on Chinese language items – which embody EV elements resembling lithium-ion batteries. Not like his predecessor, Trump has proven little curiosity in defending the EV provide chain. These new tariffs are anticipated to sharply improve the price of battery cells, drive up EV costs, and dampen home gross sales. That is significantly regarding on condition that China at the moment homes 75-85% of worldwide lithium-ion battery cell manufacturing capability.
Including to the uncertainty, China introduced in April 2025 that it might limit exports of seven heavy uncommon earth components, together with dysprosium and terbium, that are at the moment utilized in many EV motors. With China controlling round 60% of worldwide uncommon earth components (REE) mining and 90% of its processing, the US stays extremely uncovered within the occasion of extended commerce escalation. US-built autos rely closely on worldwide provide chains – Tesla, for instance, imports 20% to 25% of its elements from different nations.
This creates an advanced dynamic for Tesla. Whereas Elon Musk has usually aligned with President Trump on a number of points, current developments round tariff coverage have uncovered some friction. Musk has repeatedly expressed opposition to sweeping tariffs, which have disrupted international markets and hit Tesla particularly arduous, given its dependence on Chinese language-made elements. Tesla’s inventory has since fallen almost 50% from its December 2024 peak, underscoring the corporate’s publicity to rising prices and shaken investor confidence.
Chinese language automakers have been already outpacing their US counterparts when it comes to value competitiveness. Particularly, BYD’s aggressive pricing and home provide chain benefits have enabled it to supply EVs at considerably decrease costs. Because of this, in This autumn 2024, BYD formally surpassed Tesla in international EV gross sales, delivering 594,839 models, versus Tesla’s 491,062, marking the primary time Tesla misplaced its quarterly international gross sales lead within the electrical automobile market since 2018. Furthermore, the imposition of those tariffs has led to diplomatic friction, retaliatory tariffs and lots of shoppers resisting buying US items as a type of protest, which might additional shrink the worldwide marketplace for American EVs.
In response to rising business issues, the Trump administration has granted short-term exemptions for sure automakers, significantly these counting on provide chains that run by Canada and Mexico. In March 2025, it issued a one-month reprieve from tariffs for corporations together with Ford, Normal Motors, and Stellantis, following backlash from main automobile producers. Moreover, on the twenty ninth of April, Trump urged he would ease tariffs affecting automobile manufacturing prices after stress from US-based automakers, stating he needed to “maintain our automobile corporations” in mild of rising enter prices and business complaints. Whereas this might provide some short-term aid for ICE autos, it does little to handle the long-term challenges of EV provide chain localisation.
Shifting the US EV manufacturing provide chain away from China to different vital material-rich sources is an ongoing course of. For instance, whereas Tesla has made main investments in lithium-ion battery manufacturing at its Gigafactory in Nevada, a lot of the lithium originates from abroad, together with China, South America, and Australia. Home lithium extraction initiatives, like these in Nevada’s Thacker Move or North Carolina’s Piedmont Lithium challenge, are solely a few years away from large-scale manufacturing, however allowing, environmental issues, and infrastructure challenges could trigger vital delays.
The US is ramping up home battery manufacturing, globally rating second with a complete of 91 lithium-ion EV battery crops because of come on-line between 2025 and 2032. These crops embody each private and non-private initiatives, such because the US DoE’s Blue Oval EV Battery Plant Improvement Program, with a challenge worth of $9.2bn, and Normal Motors’ EV Transition Program, with a challenge worth of $7.2bn. But the hole stays huge: along with its current manufacturing functionality, China at the moment has over 277 upcoming lithium-ion battery crops set to succeed in completion between 2025 and 2032 – greater than triple the US complete. This not solely underscores the continued dominance of Chinese language battery manufacturing regardless of rising US momentum, but additionally highlights how the US will unlikely have the ability to offset near-term provide chain disruptions and rising prices with its home manufacturing alone.
Past tariffs, the Trump administration’s broader coverage shifts are poised to considerably impression the US EV market. Notably, plans to ease gas economic system and CO₂ discount targets would cut back the stress on automakers to spend money on costly electrification applied sciences or improve BEV gross sales, permitting them to deal with higher-profit combustion engine autos. Moreover, the administration’s intent to get rid of the $7,500 federal EV tax credit score – a transfer supported by Tesla however opposed by different automakers – might drastically scale back EV demand. These impending coverage modifications have already led to tangible setbacks within the business. A number of battery investments have already been delayed or canceled, together with LG’s Queen Creek plant in Arizona, deliberate for EV and power storage batteries, and the HL-GA Battery Firm plant in Georgia, set to produce Hyundai and Kia EVs, as corporations reassess the viability of their EV methods within the face of coverage uncertainty.
Because the state of affairs continues to evolve amid ongoing commerce negotiations and shifting tariff insurance policies, there have been short-term exemptions granted for sure classes, for instance, client electronics, together with smartphones and laptops. Though examples just like the above recommend Trump is prepared to ease tariffs in particular sectors – together with vehicles – these strikes will not be geared toward supporting EV provide chains specifically. As such, whereas conventional automobile producers could profit from short-term aid, the US EV market nonetheless faces vital obstacles. Trump’s broader anti-EV stance, mixed with coverage rollbacks and the current halting of home battery initiatives, will proceed to current main headwinds to development on this sector.
Supply: GlobalData Development Database.
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“US electrical automobile market amid commerce and coverage uncertainty” was initially created and printed by Mining Know-how, a GlobalData owned model.
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