Imports of Chinese lithium batteries surge over 500% under Biden’s administration
(White House, via Wikimedia Commons)
In July 2022, just before President Joe Biden signed the Inflation Reduction Act into law, he promised that the bill would empower the United States to compete with China and its dominant battery industry. Fast forward one year, and U.S. imports of Chinese-made batteries have skyrocketed to record levels, according to data from the Census Bureau reviewed by the Washington Free Beacon.
Biden’s landmark climate legislation introduced various subsidies to facilitate America’s transition to a green energy economy. These included tax credits of $7,500 for electric vehicles, $1,000 for electric vehicle chargers, and covering 30% of the cost of installing solar panels. However, China holds a monopoly on the global supply of rare earth materials necessary for producing these technologies. Trade data reveals that imports of Chinese electric vehicle components have surged since the Inflation Reduction Act was signed into law.
Census Bureau data shows that American imports of Chinese lithium-ion batteries, a crucial component in electric vehicles, have surged by over 500% since Biden assumed office. In 2020, the year before Biden took office, the United States imported only $2 billion worth of lithium-ion batteries from China. By 2023, imports of Chinese lithium-ion batteries had soared to over $13 billion.
The surge in imports was particularly notable after Biden signed the Inflation Reduction Act. From January 2021 to July 2022, before the law was enacted, lithium-ion battery imports from China averaged $473 million per month. After the law’s implementation, imports averaged over $1 billion per month.
The 2023 figure likely represents only a fraction of China’s total gains from Inflation Reduction Act subsidies, as noted by Sal Nuzzo, senior vice president at the James Madison Institute. Nuzzo pointed out that China is circumventing rules that prohibit subsidized products from using battery materials sourced from China or other “foreign nations of concern.”
“Approximately 70% of cobalt is produced in Africa, primarily in the Congo,” Nuzzo told the Free Beacon. “While the country may be friendly, the mine is owned by a Chinese conglomerate or a multinational controlled by the Chinese government. So, even if regulations require sourcing from a friendly country, who ultimately owns the facility producing the materials?”
“When you delve deeper, it becomes increasingly evident that the provisions in the Inflation Reduction Act could have been directly written by the Chinese Communist government,” Nuzzo continued. “Even measures ostensibly designed to limit Chinese influence are drafted in a way that allows for workarounds.”
A 2022 report from the Energy Department acknowledged that China exercises “across the board” control over the global supply of rare earth materials necessary for clean energy technologies. In recent months, the Biden administration has taken steps to weaken “Buy American” provisions in the Inflation Reduction Act and the earlier $1 trillion infrastructure law, ultimately benefiting China.
Most recently, in 2023, the Biden administration waived “Buy American” requirements for federally funded electric vehicle chargers. The 2021 infrastructure law allocated $5 billion to establish a nationwide network of charging stations, but as of December, only two states have opened stations funded by this measure, as reported by the New York Times.
Senator Marco Rubio (R., Fla.) led an effort to block the waiver, arguing that the funds should be used to purchase charging stations “made by Americans in America using American products.”
However, Biden vetoed the bill in January, despite its bipartisan support from Senators Sherrod Brown (D., Ohio) and Joe Manchin (D., W.Va.). The president stated that domestic manufacturers require more time to ramp up production.
“There is absolutely no logical reason to channel taxpayer dollars to Chinese companies,” Rubio remarked following Biden’s veto. “President Biden should prioritize the interests of the American people, heed the bipartisan wishes of Congress, and cease favoring foreign industries.”
How does the surge in imports of Chinese batteries under the Inflation Reduction Act inadvertently benefit China’s dominance in the lithium battery industry?
Ecomes clear that the Inflation Reduction Act is inadvertently benefiting China’s dominance in the lithium battery industry,” Nuzzo added.
The surge in imports of Chinese lithium batteries raises concerns about the United States’ dependency on China for critical components of green energy technologies. With China controlling the global supply of rare earth materials, including cobalt, which is essential for lithium-ion batteries, the U.S. finds itself relying heavily on Chinese imports to meet the growing demand for electric vehicles and other green energy solutions.
Critics argue that this overreliance on Chinese batteries poses significant risks to national security and economic stability. In the event of a disruption in the supply chain or trade tensions between the two countries, the United States could face shortages and skyrocketing prices for key components, hindering the development of domestic industries and slowing down the transition to a green economy.
Furthermore, concerns arise regarding the use of subsidies to support the Chinese battery industry indirectly. The Inflation Reduction Act aims to promote domestic production and job creation within the United States. However, the surge in imports of Chinese batteries suggests that the subsidies intended to bolster American industries are instead bolstering China’s battery industry. This unintended consequence calls for a reassessment of the effectiveness and targeting of government policies to ensure they truly benefit domestic industries and contribute to the nation’s long-term economic growth.
To address these concerns and reduce dependency on Chinese battery imports, policymakers must prioritize the development of domestic supply chains for critical components of green energy technologies. This includes investing in research and development to find alternatives to rare earth materials sourced primarily from China. Additionally, incentivizing domestic production through targeted subsidies and tax breaks can help stimulate investments in battery manufacturing facilities within the United States.
Collaboration and partnerships with friendly nations that have access to alternative sources of rare earth materials should also be explored. Building alliances beyond China can diversify the supply chain and reduce the risks associated with overdependence on one country.
In conclusion, the surge in imports of Chinese lithium batteries under Biden’s administration raises concerns about the United States’ dependency on China for critical components of green energy technologies. While the Inflation Reduction Act aimed to promote domestic industries, it inadvertently boosted China’s battery industry. Policymakers must now pursue strategies to reduce dependency and prioritize domestic production and sourcing options. By diversifying supply chains and investing in research and development, the United States can safeguard its economic and national security interests while advancing the transition to a sustainable future.
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