Lael Brainard, the director of the National Economic Council, visited Detroit on Monday to discuss how the Biden administration's policies aim to protect the U.S. auto industry from China's growing influence in electric vehicles, focusing on tariffs and domestic investment in EV battery production.

Brainard outlined funding and policies through bills like the Inflation Reduction Act that are driving private-sector investments into sourcing and manufacturing for EV batteries in America. By investing in America's ability to produce lithium-powered batteries domestically, companies will be less reliant on China.

Right now, China is one of the three largest exporters of lithium for EVs, along with Australia and Chile. Brainard said that Americans should be able to drive whatever kind of car they want, whether that be a gas-powered, hybrid or electric, but she wants to ensure that consumers have the choice to buy an American-made EV.

"If someone wants to drive an EV, we want to make sure it was made in America and not in China," Brainard said.

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The Biden administration recently announced a 100% tariff on Chinese-imported electric vehicles, a policy that Brainard supported and highlighted in her speech on Monday. Other countries followed suit by announcing higher tariffs on Chinese cars.

Brainard worries that China, if unchecked, could undermine the U.S. auto industry by flooding the market with underpriced electric vehicles. BYD, a Chinese auto manufacturer, offers a budget EV that is less than $10,000 brand new.

Brainard identified two significant potential risks from China's influence on American roads: fair competition and national security issues. The administration hopes that investments in America's domestic supply chain and methods like tariffs will help ensure that American companies can compete with Chinese ones.

Brainard highlighted national security risks in terms of newer "connected cars" that use and collect massive amounts of data from drivers. She pointed out that President Joe Biden recently signed a law aimed at protecting American drivers, particularly by restricting the transfer of sensitive data to foreign adversaries like China.

"It basically says that we will not allow cars driving on U.S. roads if they are using Chinese software and hardware systems," Brainard said. "We think this is very important from a national security point of view."

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Image created using a photo from Wikimedia and Midjourney.