Why EVs and semiconductor components are about to become costlier
What's the story
The Global Trade Research Initiative (GTRI) has warned that the ongoing trade conflict between the United States and China will likely drive up prices for electric vehicles (EVs), wind turbines, and semiconductor components. The warning comes after US President Donald Trump announced a new 100% tariff on Chinese imports, effective November 1, 2025. The move is in response to China's recent export controls on rare earth minerals critical for US defense, EVs, and clean energy sectors.
Trade implications
Total tariff rate on Chinese goods to touch 130%
The new tariff will raise the total tariff rate on Chinese goods to around 130%. This is the biggest escalation in US-China trade tensions since the initial tariff war started. The GTRI report said, "The impact will be felt quickly. Prices of EVs, wind turbines, and semiconductor parts are expected to rise." It also noted that China may redirect supplies toward its non-Western partners to strengthen alternative industrial networks.
Strategic negotiations
US's reliance on China for critical components
The GTRI report highlighted the strategic importance of rare earths to US industries, suggesting Washington may soon have little choice but to negotiate a new deal with Beijing. Unlike the US, which often acts before weighing economic consequences, China seems more deliberate and better prepared. The report also emphasized America's heavy dependence on China for electronics, textiles, footwear, white goods and solar panels, leaving it vulnerable to retaliation.
Economic impact
Trump's strategy could backfire
As prices rise with the implementation of new tariffs, Trump may find it difficult to control inflation and production costs. The GTRI report warned that his tough-on-China strategy could backfire, hurting the US consumers and undermining his broader economic agenda.
Trade advice
India advised to tread carefully
The GTRI report also advised India to negotiate carefully and on equal terms with the US, ensuring reciprocity and preserving its strategic autonomy. It suggested that instead of relying on shifting US promises, New Delhi must focus on building self-reliance in critical technologies and minerals. This approach shall insulate the economy from future trade shocks while permitting India to leverage its neutral position to strengthen ties with both Western and BRICS economies.