Biden's Inflation Reduction Act, Meant To Counter China, Prompted Explosion in Chinese Battery Imports

Imports of Chinese lithium batteries have increased more than 500 percent since Biden took office

(White House, via Wikimedia Commons)
February 19, 2024

In July 2022, weeks before President Joe Biden signed the Inflation Reduction Act into law, the Democrat said the bill would "give us the ability … to compete with China" and its dominant battery industry. One year later, U.S. imports of Chinese-made batteries jumped to record highs, according to a Washington Free Beacon review of Census Bureau data.

Biden's flagship climate bill created several subsidies to facilitate America's transition to a green energy economy, including tax credits of $7,500 for electric vehicles, $1,000 for electric vehicle chargers, and 30 percent of the cost of installing solar panels. But China has a stranglehold on the global supply of rare earth materials needed to produce those technologies, and trade data show that imports of Chinese electric vehicle components have exploded since Biden signed the Inflation Reduction Act into law.

American imports of Chinese lithium-ion batteries—a critical component in electric vehicles—have increased over 500 percent since Biden took office, Census Bureau data show. In 2020, the year before Biden took office, the United States imported just $2 billion worth of lithium-ion batteries from China. In 2023, imports of Chinese lithium-ion batteries jumped to over $13 billion.

The import increase was especially pronounced after Biden signed the Inflation Reduction Act. From January 2021 through July 2022, before Biden signed the Inflation Reduction Act into law, lithium-ion battery imports from China averaged $473 million per month. After the law was signed, imports averaged over $1 billion per month.

The 2023 figure likely represents just a fraction of China's total haul from Inflation Reduction Act subsidies, according to James Madison Institute senior vice president Sal Nuzzo. Nuzzo noted that China is sidestepping rules that prohibit subsidized products from using battery materials from China or other "foreign nations of concern."

"Nearly 70 percent of cobalt is produced in Africa, mainly in the Congo," Nuzzo told the Free Beacon. "Okay, so the country may be friendly. However, the mine is owned by a Chinese conglomerate or a multinational controlled by the Chinese government. So you can put the regulation in place—it's got to be sourced from a friendly country. But who owns the facility that the materials are coming out of?"

"When you peel back the onion, it becomes clearer and clearer that the provisions in the IRA basically could have been written directly by the Chinese Communist government," Nuzzo continued. "Even the things that conceivably are designed to try and limit the expansion of Chinese influence are written in a way where it's abundantly clear there are workarounds."

Indeed, a 2022 Energy Department report acknowledged that China has "across the board" control of the global supply of rare earth materials needed for clean energy technologies. And the Biden administration has moved in recent months to neuter "Buy American" provisions in the Inflation Reduction Act and the earlier $1 trillion infrastructure law, to China's benefit.

Most recently, in 2023, the Biden administration waived "Buy American" requirements for federally funded electric vehicle chargers. The 2021 infrastructure law included $5 billion to build out a nationwide network of charging stations, but as of December, only two states have opened stations funded by the measure, the New York Times reported.

Sen. Marco Rubio (R., Fla.) spearheaded a bill to block the waiver, saying the funds should be used to buy charging stations "made by Americans in America using American products."

But Biden vetoed the bill, which passed Congress with bipartisan support from Sens. Sherrod Brown (D., Ohio) and Joe Manchin (D., W.Va.), in January. The president said in a statement that domestic manufacturers need more time to ramp up production.

"There is absolutely no sane reason to funnel taxpayer dollars to Chinese companies," Rubio said following Biden's veto. "President Biden should act in the interest of the American people, follow the bipartisan wishes of Congress and stop favoring foreign industry."