Rivian (NASDAQ:RIVN) stock is in the green today, which may be attributed to the fact that the U.S. government is considering raising tariffs on Chinese electric vehicles (EVs). Chinese EVs are currently subject to a 25% tariff as well as a 2.5% auto import tariff. This has largely kept Chinese EV companies like Nio (NYSE:NIO), Li Auto (NASDAQ:LI) and XPeng (NYSE:XPEV) from selling their vehicles in the United States. Meanwhile, Rivian produces its R1T and R1S models at its manufacturing facility in Normal, Illinois.
U.S. government officials are still mulling over whether or not to increase tariffs on Chinese EVs. A decision is set to be revealed early next year.
“China is determined to dominate the electric-vehicle market by using unfair trade practices, but I will not let them. I promise you,” said President Joe Biden in a speech to United Auto Workers (UAW) members last month.
RIVN Stock: U.S. Debating on Increasing Chinese EV Tariffs
According to an estimate from BloombergNEF, China is expected to produce 60% of global new passenger EV sales this year. The country has also provided generous subsidies for its EVs, which has led to concerns in places like Europe that China has an unfair advantage. As of October, the nation had exported over 564,000 EVs to Europe and almost 48,000 EVs to the U.S. year-to-date (YTD). Tesla (NASDAQ:TSLA) is the largest exporter of vehicles from China and was responsible for 40.25% of EV exports between January and April of this year.
China is obviously opposed to the potential measures. “China firmly opposes this and urges the US side to abide by the WTO rules and provide a fair, just and nondiscriminatory business environment,” said Ministry of Foreign Affairs of China member Wang Wenbin. The Ministry of Foreign Affairs of China also believes that the potential tariff violates fair competition and could have consequences for the automotive supply chain.
Still, this news shouldn’t have any significant impact on RIVN stock. China doesn’t currently export any major branded EV trucks to the United States. The only way that these tariffs could benefit Rivian is if they influence Americans looking to purchase Chinese EV trucks to purchase an American-made EV truck instead. The market for Americans looking to purchase Chinese EV trucks is likely very small.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
