Text / Modern Logistics News all-media reporter Zhu Ruiying
The U.S. government announced on May 14 that it would impose tariffs on Chinese electric vehicles and other products.
The White House said the move would affect $18 billion worth of imports from China, including steel and aluminum, semiconductors, batteries, critical minerals, solar cells and cranes.
The U.S. tariffs on Chinese goods cover a wide range of areas and will be in effect from 2024 to 2026. The biggest increase was on electric vehicles, with tariffs rising to 100% from the current 25%, while tariffs on other imports have been doubled or imposed for the first time.
(Source: Xinhua News Agency)
A spokesperson for the Ministry of Commerce said that the US increase in Section 301 tariffs violates President Biden's commitment to "not seek to suppress and contain China's development" and "not seek to decouple and break the chain with China", and is not in line with the spirit of the consensus reached by the two heads of state, which will seriously affect the atmosphere of bilateral cooperation. The US should immediately correct its wrong approach and lift the additional tariffs imposed on China. China will take resolute measures to defend its rights and interests.
Chinese Foreign Ministry spokesman Wang Wenbin pointed out at a regular press conference on the afternoon of the 15th that a number of European politicians said that the imposition of tariffs is the next way to undermine global trade. China urges the US side to earnestly abide by WTO rules and immediately lift the additional tariffs imposed on China. China will take all necessary measures to defend its rights and interests.
Can such high tariffs really be an umbrella for the U.S. auto industry?
Is it "protection" or "diverting attention"?
As early as 2017, when the United States implemented the "double reversal" of stainless steel products in China, a number of industry experts said that China's steel exports are insignificant to the United States, and the crux of the American steel industry is not the so-called "unfair competition", nor the lack of policy protection, but its monopoly position for many years, and does not pay attention to relying on technological progress to improve production efficiency. Eventually, U.S. arrogance led U.S. Steel, a giant that had supplied steel to the Empire State Building in New York, to agree to a Japanese takeover last year.
According to statistics, the number of new energy vehicles exported by China to the United States in 2023 will be 18,800, and the number of new energy vehicles exported from January to March 2024 will be 3,094, accounting for less than 1% of China's exports and only 0.1% of China's production, which is negligible.
The U.S. side also said that although China is the world's largest exporter of cars (electric vehicles account for about 30% of the country's car sales), almost none of the cars end up in the United States.
(Source: Xinhua News Agency)
According to Bloomberg's analysis, the U.S. tariffs are mainly "symbolic", because the Chinese industries included in the tariff hike, especially the electric vehicle industry, do not depend on the U.S. market. In addition, the Biden administration has signaled to the U.S. photovoltaic industry that products such as production equipment for solar panel modules will be excluded from this tax increase.
Singapore's Straits Times noted that the move would have limited impact on Chinese industry.
The U.S. government has announced a two-year grace period before the Inflation Reduction Act's regulations on battery materials go into effect to allow EV companies and battery manufacturers to obtain alternative supplies of key EV battery minerals such as graphite from non-Chinese companies by the end of 2026. The Inflation Reduction Act (IRA) is a regulation enacted by the U.S. government in 2022 to stimulate demand for electric vehicles, with plans to have half of all new car sales made up of electric vehicles by 2030.
According to Nikkei Asia, the U.S. offers a tax credit of up to $7,500 for the purchase of certain electric vehicles. But in an effort to cut off U.S. supply chains from China, the U.S. government said in December that it would restrict EV buyers from receiving full tax credits for battery materials containing battery materials from "entities of foreign concern" such as China, Russia, North Korea and Iran.
As the U.S. graphite supply is heavily dependent on Chinese imports, Reuters said on the 4th that the new U.S. tax credit rules came into effect on January 1, greatly reducing the number of cars eligible for the credit. The Washington Post reported that data provided by the Alliance for Automotive Innovation shows that only 13 of the 122 electric vehicles currently sold in the U.S. are eligible for the full $7,500 subsidy.
In the first quarter of this year, electric vehicle sales in the United States rose only 3.3% to nearly 270,000 units, well below last year's record 47% growth. According to the data, the share of electric vehicles in the U.S. auto market has fallen to 7.15% in the first quarter.
David Ficklin, a columnist in the climate and energy field of Bloomberg, published an op-ed on May 11 titled "Tariffs and Cowardice Are Putting U.S. Automakers in a Desperate Situation", criticizing U.S. automakers for being content with the status quo, "surprisingly losing courage" in the face of the "change of the century" of electrification transformation, fearing the huge changes brought about by the rise of China's electric vehicles, and using "false data" to lobby politicians to raise tariffs on China.
"Throwing the pot" is a "spiritual victory" for China
Unlike the slow growth of electric vehicles in the United States, Tesla's sales in the Chinese market are growing rapidly.
As the largest new energy vehicle manufacturer in the United States, Tesla's 2023 financial report shows that in 2023, Tesla will deliver a total of about 1.81 million vehicles worldwide, and the actual annual production capacity of Tesla's Gigafactory in Shanghai has expanded to more than 950,000 units per year, contributing more than half of Tesla's annual delivery volume. According to the 2023 retail sales ranking of new energy manufacturers released by the Passenger Car Association, Tesla China ranked second with a share of 7.8% last year, with retail sales of 603,664 units, a year-on-year increase of 37.3%.
(Source: Xinhua News Agency)
Over the years, China has adhered to a high level of opening-up and promoted mutual benefit and win-win results between China's manufacturing industry and the world. By breaking down trade barriers and lowering tariffs, the process of liberalization and facilitation of international trade and investment has been greatly promoted. This not only provides more development opportunities for all countries, but also injects new vitality into global economic growth.
In April this year, Tesla celebrated its 10th anniversary of "the first batch of vehicles delivered in Chinese mainland". In the past decade, the number of Tesla owners in China has grown from 15 in the first batch to more than 1.7 million.
Tao Lin, vice president of Tesla, was interviewed at the first China International Supply Chain Promotion Expo, saying: "Tesla's achievements today are inseparable from the local Chinese supply chain that has developed with Tesla. ”
Facts have repeatedly proved that suppressing China's imported products is naked protectionism, and "throwing the blame" on China is a "spiritual victory".
Russia's TASS news agency hit the nail on the head when it pointed out that the US Government's imposition of tariffs on China is a clear manifestation of trade protectionism.
In Europe and the United States, there are not a few people who hold this view. A number of US media broke the news that there are "serious differences" in the United States and even within the government on whether to adjust tariffs, and even met with opposition from public opinion around the world. Tang Weishi, CEO of Maserati's parent company, Stellantis Group, has previously said that he does not ask for any form of protection and does not believe that the increase in tariffs will protect his company, and that the only way to compete with Chinese automakers is to reduce costs and offer electric vehicles at more affordable prices.
The Financial Times pointed out that the accusations against China are unfounded.
The Biden administration announced in April that it plans to increase the share of electric vehicles from 8% in 2023 to 56% in 2032. One of the main reasons why local automakers say it is difficult to achieve this is to "shut out" electric vehicles made in China or contain Chinese components.
Without low-cost batteries and battery materials made in China, electric vehicles would be too expensive for mainstream American consumers, the automakers say.
Trade barriers are difficult to reach China's auto exports
Recently, Fu Bingfeng, executive vice president of the China Association of Automobile Manufacturers, said in an interview, "The United States exaggerates the overcapacity of China's new energy vehicle industry and so-called national security concerns is a typical trade protectionism." The new energy industry is co-created by human beings and can bring common benefits to mankind, but it is very unreasonable to have restricted access to the U.S. market. ”
Although the United States has set up many barriers, it is still difficult to stop China's new energy vehicles from going global.
In 2020, the export volume of new energy vehicles in mainland China was less than 70,000 units, and by 2023, this number will reach a record high of 1.203 million units.
On May 11, data released by the China Association of Automobile Manufacturers showed that China's new energy vehicle sales in April increased by 33.5% year-on-year, far exceeding the overall growth rate of automobile sales. At the same time, China's auto exports increased by 34% year-on-year in April, and the growth rate of auto exports has been greater than that of domestic sales.
At the same time, Chinese auto brands continue to make efforts in the field of new energy, and have also made breakthroughs in the development of globalization. In 2023, China's auto exports reached a new high, with 4.91 million finished vehicles, up 57.9% year-on-year, surpassing Japan for the first time to become the world's largest auto exporter. The production and sales of new energy vehicles have ranked first in the world for nine consecutive years. China's share of the global plug-in hybrid vehicle market rose to nearly 70% in the first quarter, according to the data.
Some institutions said that it is expected that China's automobile exports to the EU are expected to increase by more than 20% in 2024; The ASEAN market has a good outlook, benefiting from the zero-tariff policy of Thailand, Indonesia and Malaysia, and is expected to maintain an export growth rate of 10~20% until 2025; In 2024, the export growth rate of Australia and South America may reach 20~30%; China's overall auto exports are expected to grow by 20% in 2024.
According to a research report cited by the automotive media Motor1 website on the 15th, from January to September 2023, the number of cars registered in Europe from China will be about 462,600, equivalent to a 4.8% share of the European market. In the past 10 years, China's share of Latin American car imports has increased from 4.6% to 21.2%. In 2022, China became the largest source of auto imports in Latin America.
According to the German newspaper Munich Mercury Zeitung, a study by UBS Group AG shows that by 2030, Chinese automakers could double their share of the global market, from 17% to 33%.
Relevant sources pointed out that although the tariffs can protect the US manufacturing industry in the short term, in the long run, it may trigger a Sino-US trade conflict and increase the cost of products in the US market.