6/16/2024

Trade War heating up

 What they now fear most about their legacies being destroyed, and consigned to history, is the internal combustion engine cars, probably their last legacy left, which is getting killed by EVs.

This will affect ICE vehicle manufacturers in USA, Japan and EU, in particular Germany. We can tell that these three countries realize the consequence of competition from EVs, which China is dominating. And that is why there is all the talk about increasing tariffs to the sky to prevent Chinese EVs from being imported into USA and EU.

Many analysts are saying that even if they increase EV tariffs triple times, Chinese EVs will still be cheaper than Western made ones. So, how could EVs made in USA, Europe and Japan hope to compete in the Global South? Even for their domestic market, they made expensive EVs, impose tariffs on Chinese EVs to make them expensive, and are in fact punishing their own people and forcing them to buy overpriced goods.

Raising high tariffs is the first step of their war against Chinese EVs. Meanwhile, they want to make hay while the sun shines, as those tariffs are additional taxes benefitting the Government of the USA and EU.

China is retaliating. China is investigating dairy products from the EU, targeting EU farmers as a first step. This is going to hurt the EU farmers, just like China raising tariffs on soya bean products from USA at the start of the trade war. China probably has found alternative sources of supply, for example from Russia, and some friendly European states and South American countries. The Chinese think years ahead and act, not on the spur of the moment, and will not be looking back with regret. 

Anonymous

1 comment:

  1. Grandma Yellen is becoming one big con-woman in her daily chanting that China's overcapacity is posing difficulties for others to compete. She should categorically tell the world that it is the USA itself that is unable to compete! She is just trying to drag in the rest of the world into her argument to garner more support, nothing more and nothing less.

    Where in the world has this mantra ever been raised by any country about a competitor's overcapacity that was posing problems for others? Isn't global trade all about favoring countries having economies of scale and comparative advantages, resulting in that country having that advantage in capacity to produce cheaper goods which will ultimately benefit the whole world. Today, China is able to produce goods cheaper, better and faster due to cheaper energy from Russia, its dominance in the control of raw materials and a well-oiled and educated population specializing in industrial expertise.

    To put it bluntly, the real reason is that the USA has lost the edge in competition and wants to stop China from moving forward and even to pull China down to its level of economic malaise.

    When the USA was the kingpin of ICE vehicle production, did anyone complain of USA overcapacity posting problems for others? When Japan overtook the USA, did the USA warned Japan similarly about its overcapacity in ICE vehicle exports to the rest of the world?

    Now, China's overcapacity is a problem for them. What a sore loser!

    Oh, what about USA's overcapacity in weapons production and toilet paper printing? Will the USA put a stop to that?

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