The hammer has landed, and the Biden administration has launched a new tariff war against China. On the basis of the original 25%, the United States will impose an additional 100% tariff on Chinese electric vehicles. In addition, 50% of power batteries and 50% tariffs on photovoltaics are basically aimed at China's new energy industry. The great powers that once held high the word "free trade" and told China to open its doors have now closed the doors themselves.
Interestingly, our side has not objected much, but Germany and Sweden have not been able to sit still. Germany and Sweden have openly stated that they oppose the United States imposing tariffs on China's exports of new energy products such as electric vehicles and power batteries. Why are Germany and Sweden on the side of China? Nominally, their reasoning is that it will undermine global trade and undermine the international division of labor. But in fact, this set of tariff tactics did not hurt China much, but it did quite a lot of damage to Germany and Sweden. Why? The root cause is that the sales of Chinese electric vehicles in the United States are almost better than nothing.
We didn't sell many cars to the United States, and Biden's tariff punch was not for China, but for the Americans, but it really hurt Germany and Sweden. Why? We can look at it in two parts:
First, the U.S. election is about to kick off, which Biden cannot escape. The US election has already formed a fixed pattern, and the closer it is to the election, the more anti-China public opinion will become. Because of being anti-China, we can get more votes. In many cases, the core of anti-China is not the confrontation between China and the United States, but the internal affairs of the United States. During the 2020 election, Biden also competed with Trump to see who was more anti-China and who was tougher on China.
In this context, Biden's tariff war against China is just the right time to reverse hype up American populism and use anti-China to win votes.
Second, China's electric vehicles exported to the United States are mainly Western brands, such as BBA in Germany, Volvo in Sweden, and Tesla in the United States. These Western brands just make electric cars in China and sell them to the United States. Pure Chinese independent brands, because of the fear of suppression by the U.S. government, do not dare to explore the U.S. market at all. BYD, SAIC, and Chery originally planned to build factories in Mexico and export to the United States. But the U.S. has included Mexico in the tariff list, and as long as it is produced by a Chinese company, even if the factory is in Mexico, it will not let go. There was no way out, and Chinese automakers had to hold off on entering the United States.
China's automobile exports exceeded 5 million units, mainly to Russia, South America, Europe, Australia, and the Middle East. Russia, in particular, imported about 1 million Chinese cars last year alone, almost all of which are Chinese brands.
At this time, let's look at it the other way around, isn't the United States a lonely sanction? China's own brands have not sold a few cars to the United States, who is the United States sanctioning? The first one is Tesla. Because the annual production capacity of Tesla's Shanghai factory is close to 1 million vehicles, only more than 600,000 units have been sold in China, and more than 300,000 units have been exported. Chinese electric vehicles are exported to the United States, mainly Tesla.
Secondly, there is Volvo. Volvo and Geely jointly founded "Polestar Auto", which is a pure electric brand focusing on the mid-to-high-end market, with a starting price of 490,000 yuan for the overseas version. It is relatively cheap in China, but the starting price is 300,000. This car only sells three to four thousand units a year in China, but it sells more than 50,000 units worldwide. Among them, most of them are sold in Europe, and some are exported to the United States.
In addition to Polestar electric vehicles, many Volvo gasoline vehicles are also exported from China to the United States. This Sweden looks, aren't you targeting me?
The same is true of the German BBA's opposition. Germany's BBA and Germany's Volkswagen have almost all purchased China's power batteries. For example, CATL and SVOLT have entered the supply chain of the BMW Group. Isn't the tax increase on China's power batteries finally borne by German car companies? China's power battery global market share is more than 65%, and Germany's BBA, the United States' Tesla, Sweden's Volvo, etc., simply can't bypass China's battery suppliers.
This is because Chinese battery suppliers do not directly export batteries to the United States, but first sell them to car companies, and then export the whole vehicle to the United States. This tariff cost is mainly borne by the automaker. If the retail price remains the same, then who suffers? Isn't it Tesla, BBA, Volvo? Germany, Sweden, can you not object?
Biden's play is essentially paving the way for the US election. Fighting tariff wars and trade wars is Trump's ability to watch the house. But now, Biden has played this card, and Trump has no card.
It seems that the tariff has increased to 100%, a fourfold increase, but China's car exports do not depend on the American market!