Perhaps it’s just because the election is only a few months away, or perhaps it’s because President Trump’s trade and economic policies toward China were always the right approach for the USA. Whatever the reasoning, the Biden administration is now proposing to use tariffs against China just like President Trump.
There’s a hidden dimension to the Chinese EV angle that makes this claim a little dubious, I will explain after the topline big story.
Overall, the New York Times is reporting [SEE HERE] that Joe Biden and USTR Katherine Tai are likely to trigger massive tariffs against imported Electric Vehicles (EVs) from China, perhaps as much as 100% due to the low cost of Chinese production. Additionally, the Biden administration is considering increasing the tariff regime against imports of Chinese steel and aluminum in a bid to protect the American industry.
On the EV issue, this tariff approach is politically duplicitous by Biden against the backdrop of massive investment in Mexico by the three largest Chinese EV automakers. Last December the three Chinese auto manufacturers, MG, BYD, and Chery, announced they were going to spend billions building new EV manufacturing plants in Mexico. Each Chinese auto manufacturer was going to spend between $1.5 to $2.0 billion.
Those Mexican built Chinese EV’s would pass into the USA market under current USMCA trade rules and regulations, as long as they technically meet the material origination rules. This can make tariffs against the Chinese imported EVs a moot point, because China will be making them in Mexico (North American trade agreement).
One of the reasons President Trump said the U.S. auto industry would suffer a “bloodbath,” is specifically because the current Chinese auto companies are targeting these EV’s in the $10,000 or less range. If you want to see what it looks like when cheap Chinese EV’s start to flood a consumer market, visit Russia – the western sanctions have only increased this flow. I can see it clear as day.
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Posted in Auto Sector,
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