Lucid Motors (NASDAQ:LCID) and some of its peers may be receiving an early Christmas gift from the White House this year. According to reports, the Biden administration is considering raising tariffs on certain Chinese exports, such as electric vehicles (EVs). This mission is aimed at spurring the type of domestic production that could give the U.S. clean energy sector a much-needed boost in 2024. And while no one associated with President Joe Biden or the White House has confirmed anything yet, speculation for this new policy is pushing LCID stock up today and boosting several of its peers. If this continues, it could be exactly what the EV market needs to rebound in 2024.
Does this mean investors should be loading up on LCID stock and other U.S. EV producers before the year ends? Let’s take a closer look at this news and assess what it means for the industry.
What’s Happening With LCID Stock
After a difficult week, LCID stock definitely needed today’s momentum. As of this writing, it is up 1.5% for the day and looks poised to close out the day in the green. Electric truck maker Rivian (NASDAQ:RIVN) is up almost 2%, and fellow EV producer Fisker (NYSE:FSR) has soared almost 5% although this momentum is due in part to Fisker winning multiple European awards, including Best Electric Vehicle in Germany.
Even so, investors shouldn’t ignore the benefits of further action against Chinese EV exports. The policy in question dates back to the trade war of 2018, during which then-President Donald Trump levied high tariffs against China, yielding no positive results for the U.S. economy at the time.
While President Biden has recognized the need for EV adoption, his administration has worked to spur growth for U.S. companies by keeping cheap Chinese vehicles out of the U.S. market. The current tariff is 25% and now it may be raised even more. This could be both a shrewd political move for Biden and an effective measure for helping domestic EV producers. As the Wall Street Journal reports:
“Raising some tariffs could allow President Biden to signal he is tough on China as he approaches a 2024 re-election campaign that could again see him face Donald Trump. At the same time, effectively barring many of the most affordable EVs from the U.S. market could slow the transition away from gasoline-powered cars, another Biden goal.”
The Road Ahead
This is exactly the type of two-birds-one-stone approach that Biden’s advisors would support as he gears up another presidential campaign. However, a strong stock market will only help Biden and, if the EV sector rebounds, it will be excellent for investors. While Republican politicians, including Trump, have levied ill-informed attacks on EVs, Biden has embraced them as the future of automotive transportation.
These higher tariffs could complicate things for a company like Tesla (NASDAQ:TSLA), which has extensive operations in China. But for companies like Lucid that build and sell EVs in the U.S., they could pave the way to an excellent 2024. For all the trouble LCID stock has experienced this year, things haven’t been all bad. The Lucid Air was recently named to Car and Driver’s 10Best for 2024. If Biden moves forward with his plans to raise tariffs, LCID stock will likely help usher in a new bull market for U.S. EV producers.
On the date of publication, Samuel O’Brient 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.
