NIO Stock Alert: Biden will reportedly impose new tariffs on Chinese electric vehicles

Shares of Nio (NYSE:NOK) stocks are in the green after reports that President Joe Biden would move forward with a plan to impose or maintain tariffs on several Chinese sectors as early as next week, including electric vehicles, batteries, semiconductors and solar cells.

Reuters noted that the government is “expected to largely maintain existing levies,” while Bloomberg explained that Biden is trying to “target key strategic sectors with new levies while rejecting the across-the-board increases sought by Donald Trump.” It is currently not clear exactly which sectors will be affected. Some sectors could also see tariff reductions, although this is less likely than tariff increases.

Last year, Nio USA CEO Ganesh Iyer noted that he would like to see Nio expand into North America by 2025. However, he later backtracked and said he was only “debating” the decision. Iyer also revealed that Nio is open to partnerships in the US, adding that expansion would require large investments in infrastructure.

NIO Stock: Biden wants to impose tariffs on Chinese electric vehicles

Chinese EV companies have largely avoided the US market due to the already high tariff of 27.5%. A higher tariff would further discourage these companies from expanding into the market.

China was not happy about the news and called on the US to reverse its plan. “Instead of correcting its wrong practices, the United States has continued to politicize economic and trade issues,” said ministry spokesman Lin Jian. “Another increase in tariffs is to add insult to injury.”

If implemented, tariffs on electric vehicles would help protect the domestic industry. Opponents of the tariffs have argued that they hinder innovation and affordability as China is the world leader in electric vehicles. In the short term, these tariffs are unlikely to have an immediate financial impact on Chinese EV inventories due to their absence from the US market.

The news comes as U.S. customers have largely preferred hybrid vehicles over electric vehicles recently. Accordingly BarronsThis is because hybrid vehicles are much cheaper than electric vehicles. If new tariffs were imposed on Chinese electric vehicles, it would likely accelerate this problem and keep affordability in check.

At the time of publication, Eddie Pan did not hold, directly or indirectly, any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to those of InvestorPlace.com Publishing Guidelines.