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Biden Administration Surrenders to China on Final EV Regulations, Weakens America’s Trade Policies

May 04, 2024

WASHINGTON, D.C. – On Friday the Biden Administration issued final regulations on the electric vehicle (EV) tax credits included in the Democrats’ so-called Inflation Reduction Act (IRA), doubling down on their desire to allow Chinese billionaires and EV manufacturers with ties to the Chinese Communist Party to continue benefiting from American taxpayer dollars. The regulation also violates the IRA by allowing battery manufacturers to source critical minerals from countries that do not have free trade agreements with the United States, weakening key leverage points for the U.S. to open foreign markets to American grown products. 

“President Biden never misses an opportunity to sell out the American taxpayer or circumvent the law when it does not suit his agenda, including blatant mischaracterizations in today’s regulations” said Ways and Means Committee Chairman Jason Smith (MO-08). “While protections against China were already weak under the IRA, these regulations will make them even weaker. Under the Biden Administration’s electric vehicle regulations, America’s working families will have to watch their hard-earned tax dollars go to line the pockets of Chinese billionaires and businesses with links to the Chinese Communist Party. Handing the American people’s money over to an adversarial nation like China makes zero economic or national security sense. 

“The Biden Administration is also deploying legally dubious ‘critical mineral agreements’ to circumvent Congress’s constitutional authority on trade, all so that Democrats can get around the IRA – the very law that they wrote and champion. This will only make the U.S. more reliant on foreign nations for critical minerals while also undermining our nation’s trade relationships and weakening incentives for countries to open up their markets to more American exports and businesses.”

In April, the Ways and Means Committee passed two pieces of legislation to stop the flow of taxpayer dollars to China from the IRA and to also halt the Biden Administration’s attempts to funnel American tax dollars to nations that do not qualify under the statutory language of the Inflation Reduction Act . The End Chinese Dominance of Electric Vehicles in America Act, introduced by Rep. Carol Miller (WV-01), stops the Biden Administration’s efforts to give American taxpayer dollars to Chinese billionaires and battery manufacturers. The Stop Executive Overreach on Trade Agreements Act, introduced by Rep. Michelle Fischbach (MN-07), ends the Administration’s attempt to redefine the term free trade agreement (FTA) to circumvent the IRA’s requirement that critical minerals be mined in the United States or an FTA partner country. 

Background on the End Chinese Dominance of Electric Vehicles in America Act (H.R. 7980):

  • Under the IRA, EVs are ineligible for a tax subsidy if they contain battery components or critical minerals sourced from a foreign entity of concern.
  • The Biden Treasury Department on Friday finalized lenient rules that allow Chinese billionaires with unofficial ties to the Chinese Communist Party and Chinese battery manufacturers to receive U.S. tax subsidies.
  • This bill closes both loopholes benefitting Chinese billionaires and Chinese manufacturers.
  • This legislation will help encourage more American mining, processing, and manufacturing of critical minerals and other EV battery components.

Click here to read the one-pager.

Background on the Stop Executive Overreach on Trade Agreements Act (H.R. 7983):

  • The Inflation Reduction Act signed by President Biden requires that critical minerals in electric vehicle batteries be sourced domestically or from a Free Trade Agreement partner to receive half of the $7,500 tax credit.
  • “Free Trade Agreement” refers to comprehensive trade agreements approved by Congress.
  • The Biden administration is usurping Congress by pretending their self-proclaimed “Critical Minerals Agreement” with Japan is an FTA that qualifies for IRA tax credits. The Administration is pursuing similar agreements with the United Kingdom and European Union.
  • These agreements do not open foreign markets to more American-made products and U.S. agriculture or reduce U.S. dependence on China for critical minerals.
  • This bill ends the use of Critical Mineral Agreements to satisfy the IRA’s domestic sourcing requirement by defining an FTA as an agreement that (1) is approved by Congress and (2) eliminates restrictions on substantially all trade with the partner.

Click here to read the one-pager.