Should U.S. Cut Import Duties On Electric-Car Parts?

By Antony Ingram

Antony Ingram

Contributing Writer BIO

Antony is an automotive obsessive: Whether it drives, sits there looking pretty or intrigues from afar, he'll talk and write about it. Automotive... More

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Import tariffs are a double-edged sword.

On the one hand, they're necessary to protect national industry, making it more expensive for overseas companies--who may have cheaper production costs--to sell their products here, allowing domestic brands to compete.

On the other, it makes it more expensive for domestic companies to buy in necessary components from overseas--such as those required to build electric vehicles. So should the U.S. cut import duties on these components?

To its credit, the U.S. is considering low-to-zero tariffs on several types of components needed for electric vehicles.

These components are listed under a special import category, explains dcautogeek. The exemption is known under the acronym MTB, or "miscellaneous tariff bill", where tariffs are eliminated or reduced when there is no domestic production, and therefore no risk of competition to domestic firms.

Senator Carl Levin recently submitted a list of tariff reductions and suspensions on products relevant to the electric and hybrid car industry in the U.S. The products on the list include lithium-ion batteries, inverters, motor generators and more.

If these reductions are passed, it could benefit the U.S. electric and hybrid car industry in terms of lower production costs.

Would these cost reductions be passed on to the consumer? That's less certain, but the lower costs are still beneficial overall as it provides more encouragement for companies to press on with developing high-technology vehicles, without incurring high development costs.

On the other hand, some worry that the tariff reductions may disincentivize domestic companies from developing similar technologies themselves, potentially harming the industry in the long run.

Let us know whether you think import tariffs on electric vehicle components should be cut or reduced, using the comments section below.

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