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Why Chinese-made electric vehicles and solar panels now face some of America’s highest trade levies.
The United States raised tariffs on a range of Chinese-made climate technologies on Tuesday, including electric vehicles, solar panels, and battery components.
Inspired by the poet Wallace Stevens, here are 13 ways of looking at them:
The biggest tariffs in the bunch are for Chinese-made electric vehicles. The Biden administration has more than quadrupled them, imposing a 100% tariff on all vehicle imports. That means that Chinese-made EVs now face higher tariff levels than any other imported goods.
Right now, the U.S. imports relatively few electric vehicles from China, and the few vehicles that we do import — which are made by the Chinese-owned brands Volvo and Polestar — may not be affected by these levies because of how imports are counted under tariff law. (Neither Volvo nor Polestar has commented on the new rates.)
What’s more, the White House suggested in February that it would use national security law to prevent EVs from Chinese companies from coming into the United States at all — even if the cars were made in a country with which the U.S. has a free trade agreement, such as Mexico. So despite the eye-popping headline figure, the tariffs on Chinese EVs do relatively little to change the decarbonization calculus in the United States. America wasn’t going to import Chinese-made EVs before, and it’s not going to do so now.
While these EV tariffs may be more for show than anything else, that is not true for the other tariffs on clean technologies. Many of these categories already faced trade levies imposed by the Trump administration, and Biden has now raised them, effectively doubling down on his electoral rival’s policy.
Starting immediately:
The solar cell figure looks impressive — and has been the source of wrangling in the solar industry — but it matters less than it looks. The United States already imports more than 80% of its solar panels from Chinese companies operating in other Asian countries.
A second round of tariffs is scheduled to kick in in 2026. Even though these hikes won’t take effect immediately, they may counterintuitively matter more, because they affect sectors where China now dominates the global industry. The longer timeline suggests that the White House is trying not to disrupt the near-term market too much; in effect, it’s giving companies a deadline to diversify their supply chains. This second round includes:
Whether you love them or hate them, you shouldn’t see these tariffs as a standalone measure. They complement the aggressive subsidies that the Biden administration has already passed on EVs, batteries, and critical minerals in the Inflation Reduction Act. It’s often lost that the IRA subsidizes EVs and their constituent parts in two ways — not only with the somewhat convoluted $7,500 personal vehicle tax credit, but with the more important 45X production tax credit, which pays companies $35 for each kilowatt-hour of EV batteries that they produce in the United States. (There are similar 45X bounties for other manufactured goods, including solar panels.)
These policies now add up to classic industrial policy in the mold of Alexander Hamilton: The U.S. is hiking tariffs on high-value imports while subsidizing their domestic production, while also providing cheap credit via the Department of Energy to companies that want to participate in these new industries. The Environmental Protection Agency has also issued new rules that will encourage U.S. consumers to buy from these new domestic producers. The one element of the classic model the U.S. has not yet adopted — except in some states — is provisioning cheap land and easy permitting for new factories.
China, it should be said, followed a similar playbook to develop its own electric vehicle industry. That should let us dispel with one foolish idea right away: the premise that tariffs never work. On the contrary, tariffs sometimes do work; as the economist Brad Setser pointed out on the social network X, America only finds itself in its current position because of how well tariffs worked. Through a range of policies including tariffs and joint ventures, China walled off its domestic market and encouraged domestic industry. That industry has now grown to challenge the world.
But they do not always work. Another important aspect of Hamiltonian industrial policy is certainty: To make forward-looking investment decisions, companies need to know policies that exist today will still be around when the production line starts whirring. This China has in gobs, and the United States lacks. You may have noticed that the front-runner in this year’s presidential election is promising to repeal many of these policies that are now rolling out — just about everything but the tariffs.
These tariff rates are unlikely to go down anytime soon. There is no party in American politics advocating for free trade with China. The choice, in the near-term, is between Biden’s vision of free trade with democracies and developing countries, plus climate and defense-driven industrial policy at the margins, versus Trump’s vision of fossil-fueled populism that aspires to autarky.
There are forces within the country that wouldn’t hate to see a return of more open trade relations with China — you can see factions within the environmental movement, the Chamber of Commerce, and Big Tech pushing for it, to name a few — but they do not control a partisan coalition.
There is no equivalence between what the Biden administration announced today and the 10% across the board tariff on all imported goods from all countries that Donald Trump has proposed. Biden’s new tariffs focus on certain strategic sectors that American officials believe the country must cultivate to stay at the technological frontier, coupled with pre-existing subsidies meant to spur domestic production of those goods. Some of the tariffs only kick in beginning in 2026 — far enough in the future, policymakers hope, for the market to prepare. Trump’s tariffs, meanwhile, would intentionally and chaotically hike prices.
We’re only here because China has won Round 1 on electric vehicles. It has created a thriving, competitive domestic EV industry that includes the BYD Seagull, an $11,000 hatchback that gets up to 250 miles of range; the Zeekr 009, a $70,000 minivan with more than 500 miles of range; and the Xiaomi SU7, a sleek $29,000 coupe. As the car journalist Kevin Williams has written, China’s EV market is far deeper, more varied, and more sophisticated than many realize. Beijing has built a Silicon Valley-style industrial cluster that produces cheap electric vehicles for the domestic market and the world — and the Biden administration can do almost nothing about that.
This dominance has emerged out of China’s economic agglomeration and its successful climb up the technological value chain. As I’ve written, China once made textiles and toys; then it made smartphones and computers; now it makes EVs and commercial jetliners. This agglomeration of economic complexity is not an academic observation; in many cases, the companies now producing China’s most competitive EVs emerged directly from its electronics industry. Xiaomi, after all, makes 15% of the world’s smartphones. CATL — now widely seen as the world’s best EV battery maker — began as a spin-off of Amperex Technology Limited, or ATL, which makes smartphone batteries. The iPhone is, in a sense, the younger sister of the Chinese-made Volvo EX30: Both are Western-designed consumer electronics that are made in Chinese factories, through Chinese engineering expertise.
Does one need to spell out precisely why American officials might care about staying even vaguely competitive with China in the EV industry? Do I need to mention the role that American-made motor vehicles have played in world history? But the motorization of war — which has now gone on for nearly a century — requires getting fossil fuels to the front lines in dangerous convoys; by one estimate, more than half of the 36,000 casualties suffered by American troops in Iraq were on fuel or water resupply missions. Wind and solar are not now so potent that they could liberate armies from these serpentine supply chains, but energy technologies can drive surprising military innovations anyway: In Ukraine and Nagorno-Karabakh, we have already seen how e-bikes and drones powered by small, lightweight batteries have transformed modern warfare.
Perhaps this kind of thinking is premature, or too dire. Nonetheless, this is what makes this moment so different from the 1970s, when Japanese-made cars changed the American car market, or the 1980s and ‘90s, when the Korean brands arrived. For the first time, a country outside the American security umbrella — a country that, in fact, aims to compete as a geopolitical hegemon with the U.S. — has attained the cutting edge of motor vehicle production. Even if Michigan and Wisconsin were not so important in the Electoral College, even if climate change did not require the rapid decarbonization of the global car fleet, that fact alone would distinguish this moment from what has come before. This is why the Chinese EV industry poses such a profound challenge to American policy.
This challenge for the U.S. also requires conjuring an entire value chain from nothing. A thoroughly classic Hamiltonian industrial policy would involve reducing tariffs on commodity and low-value inputs, such as the minerals that make up batteries, while increasing them on high-value imports, such as completed batteries and cars. But China controls so much of the critical mineral supply chain — it is “the dominant player” in global minerals refining — that American officials feel like they must diversify; they must try to spin up low value supply chains for graphite, lithium, and rare earths at the same time that they encourage the construction of EV factories.
One of the most important aspects of the Inflation Reduction Act is that it pursues two simultaneous industrial policies: In some sectors (EVs, solar, batteries), it aims for America to catch up to its technological rivals; in others (carbon capture, hydrogen), it aims to preserve America’s pre-existing position at the technological frontier. Notice what industries aren’t affected by today’s tariffs — not carbon capture, not anything to do with fossil fuels, not even anything hydrogen-related, even though China makes 61% of the world’s electrolyzers. (That is because the Biden administration has shaped its hydrogen policy so it does not automatically favor the type of electrolyzer that Chinese firms make.)
It’s easy to get ahead of oneself here. Just because China has created a superior EV industry, that doesn’t mean it will have one forever; just because China makes better EVs, that doesn’t mean that America lags on all climate technologies. But make no mistake: America is trying to do something very difficult, and it has no guarantee of success.
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Recovering from the Los Angeles wildfires will be expensive. Really expensive. Insurance analysts and banks have already produced a wide range of estimates of both what insurance companies will pay out and overall economic loss. AccuWeatherhas put out an eye-catching preliminary figure of $52 billion to $57 billion for economic losses, with the service’s chief meteorologist saying that the fires have the potential to “become the worst wildfire in modern California history based on the number of structures burned and economic loss.” On Thursday, J.P. Morgan doubled its previous estimate for insured losses to $20 billion, with an economic loss figure of $50 billion — about the gross domestic product of the country of Jordan.
The startlingly high loss figures from a fire that has only lasted a few days and is (relatively) limited in scope show just how distinctly devastating an urban fire can be. Enormous wildfires thatcover millions of acres like the 2023 Canadian wildfires can spew ash and particulate matter all over the globe and burn for months, darkening skies and clogging airways in other countries. And smaller — and far deadlier fires — than those still do not produce the same financial roll.
It’s in coastal Southern California where you find large population centers areas known by all to be at extreme risk of fire. And so a fire there can destroy a whole neighborhood in a few hours and put the state’s insurance system into jeopardy.
One reason why the projected economic impacts of the fires are so high is that the structures that have burned and the land those structures sit on are very valuable. Pacific Palisades, Malibu, and Santa Monica contain some of the most sought-after real estate on planet earth, with typical home prices over $2 million. Pacific Palisades itself has median home values of around $3 million, according to JPMorgan Chase.
The AccuWeather estimates put the economic damage for the Los Angeles fires at several times previous large, urban fires — the Maui wildfire in 2023 was estimated to cause around $14 billion of economic loss, for example — while the figure would be about a third or a quarter of a large hurricane, which tend to strike areas with millions of people in them across several states.
“The fires have not been contained thus far and continue to spread, implying that estimates of potential economic and insured losses are likely to increase,” the JPMorgan analysts wrote Thursday.
That level of losses would make the fires costlier in economic terms than the 2018 Butte County Camp Fire, whose insured losses of $10 billion made it California’s costliest at the time. That fire was far larger than the Los Angeles fires, spreading over 150,000 acres compared to just over 17,000 acres for the Palisades Fire and over 10,000 acres for the Eaton Fire. It also led to more than 80 deaths in the town of Paradise.
So far, around 2,000 homes have been destroyed,according to the Los Angeles Times,a fraction of the more than 19,000 structures affected by the Camp Fire. The difference in estimated losses comes from the fact that homes in Pacific Palisades weigh in at more than six times those in rural Butte, according to JPMorgan.
While insured losses get the lion’s share of attention when it comes to the cost impacts of a natural disaster, the potential damages go far beyond the balance sheet of insurers.
For one, it’s likely that many affected homeowners did not even carry insurance, either because their insurers failed to renew their existing policies or the homeowners simply chose to go without due to the high cost of what insurance they could find. “A larger than usual portion of the losses caused by the wildfires will be uninsured,” according to Morningstar DBRS, which estimated total insured losses at more than $8 billion. Many homeowners carry insurance from California’s backup FAIR Plan, which may itself come under financial pressure, potentially leading to assessments from the state’s policyholders to bolster its ability to pay claims.
AccuWeather arrived at its economic impact figure by looking not just at losses from property damage but also wages that go unearned due to economic activity slowing down or halting in affected areas, infrastructure that needs to be repaired, supply chain issues, and transportation snarls. Even when homes and businesses aren’t destroyed, people may be unable to work due to evacuations; businesses may close due to the dispersal of their customers or inability of their suppliers to make deliveries. Smoke inhalation can lead to short-, medium-, and long-term health impacts that take a dent out of overall economic activity.
The high level of insured losses, meanwhile, could mean that insurers’ will see less surplus and could have to pay more for reinsurance, Nancy Watkins, an actuary and wildfire expert at Milliman, told me in an email. This may mean that they would have to shed yet more policies “in order to avoid deterioration in their financial strength ratings,” just as California has been trying to lure insurers back with reforms to its dysfunctional insurance market.
The economic costs of the fire will likely be felt for years if not decades. While it would take an act of God far stronger than a fire to keep people from building homes on the slopes of the Santa Monica Mountains or off the Pacific Coast, the city that rebuilds may be smaller, more heavily fortified, and more expensive than the one that existed at the end of last year. And that’s just before the next big fire.
Suburban streets, exploding pipes, and those Santa Ana winds, for starters.
A fire needs three things to burn: heat, fuel, and oxygen. The first is important: At some point this week, for a reason we have yet to discover and may never will, a piece of flammable material in Los Angeles County got hot enough to ignite. The last is essential: The resulting fires, which have now burned nearly 29,000 acres, are fanned by exceptionally powerful and dry Santa Ana winds.
But in the critical days ahead, it is that central ingredient that will preoccupy fire managers, emergency responders, and the public, who are watching their homes — wood-framed containers full of memories, primary documents, material wealth, sentimental heirlooms — transformed into raw fuel. “Grass is one fuel model; timber is another fuel model; brushes are another — there are dozens of fuel models,” Bobbie Scopa, a veteran firefighter and author of the memoir Both Sides of the Fire Line, told me. “But when a fire goes from the wildland into the urban interface, you’re now burning houses.”
This jump from chaparral shrubland into neighborhoods has frustrated firefighters’ efforts to gain an upper hand over the L.A. County fires. In the remote wilderness, firefighters can cut fire lines with axes, pulaskis, and shovels to contain the blaze. (A fire’s “containment” describes how much firefighters have encircled; 25% containment means a quarter of the fire perimeter is prevented from moving forward by manmade or natural fire breaks.)
Once a fire moves into an urban community and starts spreading house to house, however, as has already happened in Santa Monica, Pasadena, and other suburbs of Los Angeles, those strategies go out the window. A fire break starves a fire by introducing a gap in its fuel; it can be a cleared strip of vegetation, a river, or even a freeway. But you can’t just hack a fire break through a neighborhood. “Now you’re having to use big fire engines and spray lots of water,” Scopa said, compared to the wildlands where “we do a lot of firefighting without water.”
Water has already proven to be a significant issue in Los Angeles, where many hydrants near Palisades, the biggest of the five fires, had already gone dry by 3:00 a.m. Wednesday. “We’re fighting a wildfire with urban water systems, and that is really challenging,” Los Angeles Department of Water and Power CEO Janisse Quiñones explained in a news conference later that same day.
LADWP said it had filled its 114 water storage tanks before the fires started, but the city’s water supply was never intended to stop a 17,000-acre fire. The hydrants are “meant to put out a two-house fire, a one-house fire, or something like that,” Faith Kearns, a water and wildfire researcher at Arizona State University, told me. Additionally, homeowners sometimes leave their sprinklers on in the hopes that it will help protect their house, or try to fight fires with their own hoses. At a certain point, the system — just like the city personnel — becomes overwhelmed by the sheer magnitude of the unfolding disaster.
Making matters worse is the wind, which restricted some of the aerial support firefighters typically employ. As gusts slowed on Thursday, retardant and water drops were able to resume, helping firefighters in their efforts. (The Eaton Fire, while still technically 0% contained because there are no established fire lines, has “significantly stopped” growing, The New York Times reports). Still, firefighters don’t typically “paint” neighborhoods; the drops, which don’t put out fires entirely so much as suppress them enough that firefighters can fight them at close range, are a liability. Kearns, however, told me that “the winds were so high, they weren’t able to do the water drops that they normally do and that are an enormous part of all fire operations,” and that “certainly compounded the problems of the fire hydrants running dry.”
Firefighters’ priority isn’t saving structures, though. “Firefighters save lives first before they have to deal with fire,” Alexander Maranghides, a fire protection engineer at the National Institute of Standards and Technology and the author of an ongoing case study of the 2018 Camp fire in Paradise, California, told me. That can be an enormous and time-consuming task in a dense area like suburban Los Angeles, and counterintuitively lead to more areas burning down. Speaking specifically from his conclusions about the Camp fire, which was similarly a wildland-urban interface, or WUI fire, Maranghides added, “It is very, very challenging because as things deteriorate — you’re talking about downed power lines, smoke obstructing visibility, and you end up with burn-overs,” when a fire moves so quickly that it overtakes people or fire crews. “And now you have to go and rescue those civilians who are caught in those burn-overs.” Sometimes, that requires firefighters to do triage — and let blocks burn to save lives.
Perhaps most ominously, the problems don’t end once the fire is out. When a house burns down, it is often the case that its water pipes burst. (This also adds to the water shortage woes during the event.) But when firefighters are simultaneously pumping water out of other parts of the system, air can be sucked down into those open water pipes. And not just any air. “We’re not talking about forest smoke, which is bad; we’re talking about WUI smoke, which is bad plus,” Maranghides said, again referring to his research in Paradise. “It’s not just wood burning; it’s wood, plastics, heavy metals, computers, cars, batteries, everything. You don’t want to be breathing it, and you don’t want it going into your water system.”
Water infrastructure can be damaged in other ways, as well. Because fires are burning “so much hotter now,” Kearns told me, contamination can occur due to melting PVC piping, which releases benzene, a carcinogen. Watersheds and reservoirs are also in danger of extended contamination, particularly once rains finally do come and wash soot, silt, debris, and potentially toxic flame retardant into nearby streams.
But that’s a problem for the future. In the meantime, Los Angeles — and lots of it — continues to burn.
“I don’t care how many resources you have; when the fires are burning like they do when we have Santa Anas, there’s so little you can do,” Scopa said. “All you can do is try to protect the people and get the people out, and try to keep your firefighters safe.”
Plus 3 more outstanding questions about this ongoing emergency.
As Los Angeles continued to battle multiple big blazes ripping through some of the most beloved (and expensive) areas of the city on Thursday, a question lingered in the background: What caused the fires in the first place?
Though fires are less common in California during this time of the year, they aren’t unheard of. In early December 2017, power lines sparked the Thomas Fire near Ventura, California, which burned through to mid-January. At the time it was the largest fire in the state since at least the 1930s. Now it’s the ninth-largest. Although that fire was in a more rural area, it ignited for some of the same reasons we’re seeing fires this week.
Read on for everything we know so far about how the fires started.
Five major fires started during the Santa Ana wind event this week:
Officials have not made any statements about the cause of any of the fires yet.
On Thursday morning, Edward Nordskog, a retired fire investigator from the Los Angeles Sheriff’s Department, told me it was unlikely they had even begun looking into the root of the biggest and most destructive of the fires in the Pacific Palisades. “They don't start an investigation until it's safe to go into the area where the fire started, and it just hasn't been safe until probably today,” he said.
It can take years to determine the cause of a fire. Investigators did not pinpoint the cause of the Thomas Fire until March 2019, more than two years after it started.
But Nordskog doesn’t think it will take very long this time. It’s easier to narrow down the possibilities for an urban fire because there are typically both witnesses and surveillance footage, he told me. He said the most common causes of wildfires in Los Angeles are power lines and those started by unhoused people. They can also be caused by sparks from vehicles or equipment.
At about 27,000 acres burned, these fires are unlikely to make the charts for the largest in California history. But because they are burning in urban, densely populated, and expensive areas, they could be some of the most devastating. With an estimated 2,000 structures damaged so far, the Eaton and Palisades fires are likely to make the list for most destructive wildfire events in the state.
And they will certainly be at the top for costliest. The Palisades Fire has already been declared a likely contender for the most expensive wildfire in U.S. history. It has destroyed more than 1,000 structures in some of the most expensive zip codes in the country. Between that and the Eaton Fire, Accuweather estimates the damages could reach $57 billion.
While we don’t know the root causes of the ignitions, several factors came together to create perfect fire conditions in Southern California this week.
First, there’s the Santa Ana winds, an annual phenomenon in Southern California, when very dry, high-pressure air gets trapped in the Great Basin and begins escaping westward through mountain passes to lower-pressure areas along the coast. Most of the time, the wind in Los Angeles blows eastward from the ocean, but during a Santa Ana event, it changes direction, picking up speed as it rushes toward the sea.
Jon Keeley, a research scientist with the US Geological Survey and an adjunct professor at the University of California, Los Angeles told me that Santa Ana winds typically blow at maybe 30 to 40 miles per hour, while the winds this week hit upwards of 60 to 70 miles per hour. “More severe than is normal, but not unique,” he said. “We had similar severe winds in 2017 with the Thomas Fire.”
Second, Southern California is currently in the midst of extreme drought. Winter is typically a rainier season, but Los Angeles has seen less than half an inch of rain since July. That means that all the shrubland vegetation in the area is bone-dry. Again, Keeley said, this was not usual, but not unique. Some years are drier than others.
These fires were also not a question of fuel management, Keeley told me. “The fuels are not really the issue in these big fires. It's the extreme winds,” he said. “You can do prescription burning in chaparral and have essentially no impact on Santa Ana wind-driven fires.” As far as he can tell, based on information from CalFire, the Eaton Fire started on an urban street.
While it’s likely that climate change played a role in amplifying the drought, it’s hard to say how big a factor it was. Patrick Brown, a climate scientist at the Breakthrough Institute and adjunct professor at Johns Hopkins University, published a long post on X outlining the factors contributing to the fires, including a chart of historic rainfall during the winter in Los Angeles that shows oscillations between very wet and very dry years over the past eight decades. But climate change is expected to make dry years drier in Los Angeles. “The LA area is about 3°C warmer than it would be in preindustrial conditions, which (all else being equal) works to dry fuels and makes fires more intense,” Brown wrote.