That 100% tariff hike on Chinese EVs is more showmanship
than trying to cripple China. It will hurt car buyers in the USA more
than Chinese carmakers. A tariff is just a tax on consumers, nothing
more nothing less. Some even venture to suggest that a 100% tariff on
Chinese EVs is still leaving them cheaper than comparative EVs made in
USA and Europe. China has yet to dominate the EV market in the USA by a
long shot.
Only 16% of Chinese EVs were reported to be sold
outside of China, with 84% sold domestically. What does all this mean?
Is there really an overcapacity of Chinese EVs flooding the world
market? Or just an empty war cry? Moreover, the reports suggests that
EVs sold in China are much cheaper than those sold globally. Does that
indicate dumping?
China has retaliated. China will impose a 25%
tariff on vehicles made in USA, Europe and Japan entering the Chinese
market. Their market share in China is way more than 16%. Statistics
points to a 48% share of the whole Chinese car market by foreign
carmakers, and the tariffs will obviously hurt. How much of a dent it is
going to make in these foreign carmakers bottom line in production
capacity is unclear.
China's imposing tariffs on foreign cars is
not the first retaliation to hit. China will move into other sectors.
Right now, China is investigating dumping of plastic materials by the
USA and Japan among others.
Anonymous
3 comments:
We have just been told the real reason for USA tariffs on EVs from China, and it is nothing to do with China's industrial overcapacity. China is far from dumping EVs due to overcapacity, as only a small percentage of Chinese made EVs are entering the global market. It is all about the USA, German and Japanese EV makers not being able to compete with China, and they have to come together to invent narratives to contain China. The same modus operandi that resulted in the formation of the Chips Alliance, which is starting to unravel.
The 100% tariffs on Chinese EVs are going nowhere, if it is meant to cripple China. Tariffs by the USA will only make those EVs more expensive in the USA, not anywhere else in the Global South. That is where the big market is going to be for Chinese EV makers and the West cannot compete. As China continues to dominate the market in the Global South, the USA market may even be less relevant to Chinese EV makers moving forward. Already the signs are there that Chinese EV makers are setting up plants in South America and some European countries like Hungary and avoiding the USA altogether. Even supporting supply chain players of EVs like CATL, a Chinese battery maker, are abandoning the USA, leaving EV makers in the USA like Ford, Volkswagen and Hyundai in the lurch.
If China's total dominance of the EV market is a grave concern for the rest of the world, why isn't the USA talking about its total over capacity in weapon manufacturing and sales, a destructive over capacity which should be a more concerning issue for rest of the world. What about its overcapacity in toilet paper printing and flooding the world by exporting its inflation? Are these not issues that the world should care more about?
The USA has touted its arsenal of more than 7,000 nuclear missiles, which by itself is an over capacity. Why not look at itself in the mirror before opening its goldfish gap. Like a goldfish opening and closing its mouth just for air, the narratives trotted out by the USA are just hot air without substance.
China knows what is happening. It was the Europeans that wanted this tariff on Chinese EVs. Yellen told China about it. It is meaningless for such a tariff when China export to US is insignificant.
So China responded by raising tariffs on European and Japanese cars as well as Americans. American cars in China are manufactured in China. Imported European and Japanese expensive cars are going to get blocked out of Chinese markets.
Now it is panic stations for European car makers. Punished by the USA and now punished by China as well. Sometimes, what you wish for is not what you get.
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