Today, I would like to talk to you about the 100% tariffs imposed by the United States on Chinese electric vehicle imports.
Let's start with the reality that there are very, very few Chinese electric vehicles currently being sold in the United States.
Why? Three reasons:
First of all, the overall sales of electric vehicles in the United States have not been good recently, because the infrastructure (charging piles) in the United States is too poor, and the people are more inclined to hybrid vehicles at present.
Charging stations in Texas, USA
Second, the United States has already imposed a 25% tariff on Chinese electric vehicles, which is not low;
Finally, more importantly, the United States' policy on Chinese enterprises is unstable and unfriendly, cars are not one-time consumer products, need to establish a maintenance and other systems, need to invest in heavy assets, in case the policy changes, such as this time to increase to 100%, then the early investment in 4S stores and other heavy assets may be lost.
Since Chinese electric vehicles were not sold in the United States, why did the Biden administration come up with this policy?
In fact, the 100% tariff imposed by the United States this time is not only to intercept the sale of Chinese electric vehicles to the United States, but also has three meanings, the third of which is the biggest conspiracy:
First of all, the tariffs are for the sake of industrial workers in domestic companies in the United States to canvass for votes in the general election in a few months.
This is easy to understand, after Trump said in a speech in the United States that he would impose 100% tariffs on Chinese cars if he took office.
Biden looked at it, there is no need to wait for you to come to power, I will add it first, which not only hits Trump, but also attracts the votes of relevant stakeholders of American car companies.
Biden is canvassing for votes
Moreover, in the current United States, the boom in electric vehicles is fading, and at this point in time, the tariffs will affect very few employees in the sales field and after-sales field.
Therefore, this policy can be said to please General Motors, Ford, Chrysler, Tesla and other American car companies, but without hitting any sales-side employment, killing two birds with one stone.
Secondly, the second point, the imposition of tariffs, is for the EU to see.
The United States is most afraid of not only the competition for Chinese electric vehicles in the U.S. market, but also the occupation of other major markets, especially the European market.
It can be said that the United States wants to get involved in any current crackdown on China's economy, not to mention China's most important electric vehicle field.
Talks between the United States and the European Union
After the promulgation of the U.S. policy, when Yellen, Blinken and others go to the EU to lobby in the future, they can directly say to the UK, the EU and other countries: "Look! I've done that, I'm a role model, and everybody has to keep up with me. ”
Finally, the third point is that the imposition of tariffs is forcing Chinese companies to relocate industries.
The United States is the world's second largest automobile consumer market (the first is China), not only Chinese car companies, but also car companies in Germany, Japan and South Korea and other countries hope to occupy a certain share.
However, due to the previous 25% tariffs and policy uncertainty, Chinese automakers are already considering investing in Latin America (especially Mexico) or building joint ventures with local factories, and then exporting to the United States on an OEM basis in a third country.
BYD is planning to build a factory in Mexico
A set of data can prove that in January ~ April 2024, China's exports to Latin America are growing rapidly, an increase of nearly 8% compared with the same period last year, which is a very large growth amount.
Next, the U.S. policy of imposing tariffs this time, coupled with the "duty-free policy of the North American Trade Area" of the United States, Canada and Mexico, responded to it.
On the one hand, direct exports are subject to a heavy tax of 100%, and on the other hand, building factories in Mexico is not only tax-free, but also receives subsidies for electric vehicles in the United States, and as a Chinese automaker, it must be planning the latter.
However, the U.S. government is not unaware of this loophole, but hopes to attract Chinese battery and electric vehicle production capacity to Mexico.
In this way, although the Chinese part of the investors in Mexico will still be Chinese, it will inevitably give the United States more control and influence.
Whether it is CATL or BYD, it is basically difficult for the United States to interfere in the production and operation of China . But in Mexico, it can not only drive the construction of local supply chains, but also steal from the Chinese, which can be described as a secret move by the Americans.
So, what about China?
First of all, Chinese car companies are ready to build factories in Mexico, so in the future, the construction of local supply chains, as well as core technologies, management plans and other aspects must be considered, hold the hole card, and avoid being copied by the United States.
Second, realistically speaking, if China imposes tariffs on US car imports, such a policy will not be of much value (because there is not much volume), and can it be counterattacked by tariffs in other areas? I believe that it is possible, but how to do it will test the wisdom of the relevant departments.
What do you think about the U.S. approach and China's counterattack? Feel free to leave a message in the comment area.
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