President Biden has quadrupled tariffs on electric vehicles from China &#; from 25% to an eye-watering 100% &#; in a move designed to bolster U.S. jobs and manufacturing.
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"I'm determined that the future of electric vehicles be made in America by union workers. Period," Biden said on Tuesday.
Former President Donald Trump first imposed the tariffs, which are taxes paid by Americans who import goods, on vehicles and a wide range of other China-made products. After a review, the Biden administration opted to keep all of the tariffs and even increase some of them &#; including on solar cells, batteries, computer chips, steel and aluminum.
The White House says "strategic" hikes, paired with massive subsidies previously passed by Congress, can help build a U.S.-based supply chain for green energy.
"Until China changes its practices, these tariffs are also meant to give our industries a break, a respite, to be able to breathe," U.S. Trade Representative Katherine Tai told NPR.
Here are five things to know about the tariffs on EVs.
So far, the Trump-era tariffs have largely kept affordable Chinese-made vehicles out of the U.S., even as they gain popularity in Europe and other markets. The tariff hikes are meant to ensure that doesn't change.
Chinese electric vehicles from makers like BYD aren't just cheap &#; they're also good. Economist Sue Helper, a former Biden official who recently took a BYD Seagull for a test ride, called the car "impressive" and "cute."
And it retails for just $10,000 in China. Smaller sizes, innovative designs and efficient business practices help keep the prices of Chinese autos down. But exploitative labor practices and enormous government subsidies also play a big role.
There's bipartisan concern that if those cars were sold in the U.S. at such cheap prices &#; "unfairly underpriced," as White House economist Lael Brainard put it &#; they would undercut U.S.-made vehicles and result in catastrophic job losses at American factories.
Increasing the price of electric vehicles seems to contradict another Biden priority: Cutting carbon emissions. A widespread transition from gasoline vehicles to battery-powered cars is central to Biden's climate goals.
But Biden wants to cut emissions in a specific way, which is why EVs and other clean industries are getting both giant subsidies and protectionist tariffs. He wants a U.S.-based green energy supply chain &#; from raw materials all the way to finished products &#; with American jobs, preferably union jobs, at every step.
The two goals are sometimes in tension. The consumer tax credits for electric vehicles, for example, come with a long list of restrictions designed to nudge auto companies toward U.S. suppliers. That means fewer vehicles qualify than they would otherwise. But as a result, companies have already started shifting supply chains &#; the other goal. The tariffs are meant to buy U.S. industry more time to make the transition.
Some climate groups argue that long-term, it's better to support &#; and regulate &#; U.S. companies as they go green, rather than import Chinese clean-energy products now. And there's a political case that embracing Chinese EVs, if it does cost jobs, could trigger a backlash that would reduce support for climate action.
Not too long ago, both Democrats and Republicans vocally endorsed free trade, denouncing trade barriers as obstacles to prosperity and government support for specific industries as "picking winners and losers." These days, there's bipartisan support for tariffs. Subsidies for certain types of manufacturing are more commonly (and approvingly) called industrial policy.
U.S.-made EVs, in particular, have lots of boosters. The auto industry has embraced Biden's subsidies. Powerful labor groups see a chance to bring jobs back to the States. Climate groups see an opportunity to get automakers to clean up their supply chains, among other changes. And some Republican-led states see massive investments on the line.
And car buyers? Even some who would love to buy a cheap Chinese EVbelieve it's in the best interest of the U.S. to keep them out.
Not everyone is on board with Biden's vision of a world-leading made-in-America EV supply chain, from lithium mine to finished vehicles. The oil industry and Trump are vocal critics.
But between the coalition supporting U.S. clean manufacturing, and a broad political antagonism toward China, these tariffs have widespread support.
As he increased tariffs on EVs, semiconductors and other specific technologies, Biden left the other tariffs imposed by Trump untouched. (That's true even though the White House acknowledged the tariffs had not achieved the stated goals ofincreasing U.S. exports or stopping theft of intellectual property.)
In some respects, Trump's policy toward China is now Biden's policy toward China. But there are differences, as the two presidential candidates themselves point out.
Trump, speaking to reporters outside of his criminal trial in New York, responded to the tariff hikes on Tuesday by saying Biden needs to go even further. "They've also got to do it on other vehicles and they have to do it on a lot of other products," Trump said. He has floated ideas for across-the-board tariffs on all imports, regardless of country.
Biden, meanwhile, describes his approach as "strategic and targeted" and says across-the-board tariffs would cost American households $1,500 a year. In another difference, Biden's tariffs are also paired with those massive subsidies for domestic production of EVs, semiconductors and other technologies &#; subsidies Trump has denounced.
Now, it's China's move. How will it retaliate against these tariffs &#; or evade them?
Chinese automakers may choose to escape the tariff by building plants in Mexico to make cars bound for the U.S. If that happens, the U.S. might persuade Mexico to renegotiate trade agreements, institute a ban on vehicles made by Chinese companies, or find another approach to box China out.
Meanwhile, there might still be paths to bring Chinese-made EVs to the U.S. Volvo Cars is planning to bring a hotly anticipated small SUV to the states this summer; its spinoff Polestar sells made-in-China EVs in the U.S. now. In statements, both companies say they are evaluating the impact of the tariff hikes. They may have workarounds to reduce the impact. They also both express support for free trade &#; and emphasize they are investing in manufacturing in South Carolina.
The auto industry is global. Swedish automakers owned by a Chinese company building cars in South Carolina is par for the course. And it's one sign of why higher tariffs aren't the final word on Chinese EVs and the U.S. auto market. China is reshaping the auto industry; the question is how.
Copyright NPR
Ordering a custom aluminum extrusion can often be the right choice when there is nothing in regular inventory that meets your needs.
Whether you need a specific profile, an unusual alloy, or a particular surface finish, knowing more about how much custom aluminum extrusions cost can help you better predict expenses and manage your project&#;s budget.
In this article, we cover some of the common factors that impact the cost of custom extrusions so that you can better prepare for how these products will impact your budget.
#1 Die and Tooling CostsFor custom profiles, new dies have to be tailor-made from scratch. For the manufacturers that need to recoup the costs for these special dies, this means raising the overall price of your order.
Compounding this even more, particularly complex geometries for the new die design will take more time and labor to produce, further increasing the cost to produce and the lead time for the final product.
Tool costs for extrusion dies that are used in normal architectural and industrial applications can range from $400 to $1,000. Tool costs for large parts to be made on 2,000-4,000 ton presses could be as high as $2,000.
Sometimes our manufacturers refund tool costs if a stipulated amount is purchased within 2 years. Most manufacturers do not charge for replacement tools after their useful life if orders continue.
Normal tool turnaround time is 3-4 weeks and production follows within a week of sample approval.
For more detail on these and other important design considerations, check out our helpful Aluminum Extrusion Design Guide as well as our article on Aluminum Extrusion Dies.
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#2 Current Aluminum CostAs you might expect, the current cost of the base material used for your product will have a direct impact on the final cost of the order. The price of raw aluminum is affected by many factors, such as global demand, industry trends, and electricity costs. The base price of aluminum can be estimated through exchanges like the LME Aluminum valuation.
Since the cost of aluminum has fluctuated substantially in recent years, sometimes it makes sense to pay for a large amount of metal all at once to lock in a rate, particularly when you have ongoing production needs with a manufacturer.
In these cases, the extruder buys a considerable amount of the metal in advance and uses it for your production needs over time. By doing this, the extrusion costs can be made more predictable for you.
It&#;s also important to keep in mind that different aluminum grades may have different costs and that a manufacturer likely won&#;t be stocked up on many of the unusual aluminum alloys that are sometimes requested in custom orders. This can increase the price for obtaining special stock.
The cost of aluminum is the biggest wild card in the whole equation of extrusion cost. It has varied anywhere from $1,500 to $3,500 per metric ton in recent years.
Material costs can be affected by political events in different parts of the world. For example, Ukraine and Russia are key aluminum producers, and the war between them affects prices. Also, China is a big smelter of Aluminium, and recent environmental restrictions impact their operations.
#3 Labor and Production CostsOf the different factors listed in this article, the cost of manufacturing labor is often one of the easiest to predict when evaluating the cost for custom aluminum extrusions. Relatively stable and based on regional conditions and regulations, this information is typically easy to find. While manufacturing abroad can incur an increase in shipping costs, these are typically offset by larger production volumes as we&#;ll discuss later on.
Additional production expenses that can impact overall costs include operating overhead, equipment purchases, maintenance, utilities, and more. While they may be somewhat harder to determine, they are similarly impacted by the conditions in the region where the manufacturing takes place.
At Gabrian International, most of our aluminum extrusion production takes place in India, which has relatively low labor costs compared to the US or Europe.
#4 Surface Finishing and Secondary OperationsSurface finishing, as well as other secondary operations, can be performed on extrusions after concluding the extrusion procedure. These processes can be done to improve appearance, enhance protection, or to achieve special physical or mechanical characteristics needed for the product&#;s intended application.
When it comes to physical alterations, CNC machining can be used to create holes and shapes that cannot be achieved by extrusion alone. Bending extrusions is another common practice for creating physical alterations when a straight profile is not suitable for the intended application.
Temper treatments are the most common secondary operations used for changing the mechanical properties of extruded aluminum products. Temper treatments can be used to alter the strength, formability, hardness, and other physical attributes of extrusions. Normally, there is no extra charge for different tempers, though, as long as volumes are high enough.
Finally, surface finishes can be applied which affect only the aluminum&#;s surface. Aluminum extrusions naturally have a very smooth finish after normal processing, so they rarely require sanding, but sandblasting can be used to roughen up the surface if required, especially in preparation for other surface treatments like coatings.
Coatings and other types of surface finishes add a layer of material to the extruded aluminum for protection, improved appearance, or both. For example, powder coatings create a very durable and hard finish in a wide assortment of custom colors. Anodizing, on the other hand, is an electrochemical process that thickens the naturally-occurring oxide layer in aluminum to provide an appealing and corrosion-resistant surface. (Related: Should You Anodize or Powder Coat?)
If you want to learn more about these and other surface-finishing processes for aluminum extrusions, you can read our article on Types of Finishes for Aluminum Extrusions.
While adding any secondary operations to your product order will inevitably increase cost, you can save money by selecting a manufacturer with vertically integrated capabilities. Facilities that combine extrusion, fabrication, and finishing services will minimize the burden of logistical management and reduce the final cost for your order when compared with completing coordinated operations between multiple different vendors.
Costs for anodizing and powder coating vary from $1,200 to $1,400 per metric ton depending on the profiles. Alodine finishing is a little less expensive at about $800 per metric ton. There are special finishes such as wood-look finishing that are significantly more expensive and the cost generally depends on surface profiles.
Prices vary based on the complexity and kinds of machines required. Simple drilling operations can be in the range of $200-$300 per metric ton. For more complex operations, there will be tooling costs involved as well as machining time.
#5 Production VolumesAs with many other manufactured items, buying custom aluminum extrusions in bulk can lead to lower costs per unit produced.
This is true in part because, when custom orders are being produced, the basic die and tooling costs will often be very similar between a small and large order. If the manufacturer needs to recoup this expense for a small number of parts, the cost to produce each part is higher and is passed on to the buyer. However, as the production volume increases, the cost-per-unit will go down.
Bonus Factor: Logistics CostsThe COVID pandemic has put into perspective how much the low cost of commodities can be impacted by transportation logistics. For example, shipping disruptions have caused major fluctuations in the cost of containers shipped from India since the start of the pandemic. Around the world, the rising costs for containers and shipping ultimately impact the final price tag facing consumers, and these costs can change overnight.
Additionally, local duties and tariffs on imported products, such as the United States&#; anti-dumping duty, can raise the cost of bringing products from abroad to your market. These extra fees may be harder to foresee or determine, but looking into whether they could impact your business can help you make adjustments that ensure your project remains profitable.
Despite these concerns, the shorter lead times in Asia compared to North America, as well as the lower production costs, are still worth it for many customers around the world.
The cost of international shipping has varied widely in recent years. Shipping a 40-foot container from Asia to North America has ranged anywhere from $8,000 to as high as $20,000. The costs have been driven by political uncertainty as well as the economic and trade climate. Recently the pandemic has had a significant impact on container availability and the Russia-Ukraine war has added more uncertainty impacting cost and availability.
Optimizing the Cost of Custom Aluminum ExtrusionsUltimately, the total price tag for manufacturing custom aluminum extrusions comes down to a combination of many factors. Some of these factors are predictable, like production volumes and labor costs, while others can be harder to foresee, like shipping costs and the market price of aluminum stock.
Gabrian&#;s Aluminum Extrusion Guide can help you to optimize the design of your extrusions so you can minimize production costs. If you need additional insights, our aluminum extrusion experts can help you decide the best combination of alloy, surface finish, and temper treatment needed to achieve your project&#;s goals at a cost you can manage.
Take advantage of our custom aluminum extrusion capabilities for your next manufacturing project to get a rapid turnaround for high-quality extrusions that fit within your budget.
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