The US has been in the lead with higher tariff barriers and controls on high-tech exports, initiated under the Trump presidency and markedly intensified by Biden.
It is now being joined by the European Union, which this week imposed an additional tariff of 35 percent on Chinese electric vehicles on top of a 10 percent tariff already in force.
The new measures, which will come into force next week, are to last five years. They were introduced on the basis that Chinese EV makers were benefiting unfairly from state subsidies.
The Chinese government rejected the claim of undue state support, saying it would “continue to take all necessary measures to resolutely safeguard the legitimate rights and interests of all Chinese companies.”
The decision to impose the tariffs came after eight rounds of talks aimed at trying to devise a mechanism through which a minimum price could be set along with the volume of Chinese exports. But the talks broke down with both sides saying the differences remained significant.
Further talks are to be held, with the EU accepting an invitation by China to send envoys to Beijing to see if some agreement can be reached on these mechanisms.
The divisions within the EU, which must rank as some of the most significant on trade issues in the history of the Union, were underscored by comments from Germany. Hildegarde Müller, the head of the German auto industry association, VDA, said the decision was “a setback for free global trade and so for prosperity and Europe’s growth.”
The chief executive of BMW Oliver Zipse said protectionism would only make cars more expensive for consumers and accelerate plant closures in Europe.
The interconnectedness of the global car industry was indicated by Roberto Vavassori, who told the Financial Times (FT) that “for many suppliers in the automotive industry, [the Chinese] are both the biggest threat and the biggest customer.”
He asked: “What did the Chinese do, what did the Japanese do and what did the Koreans do when they were behind on technology? They collaborated. The European industry needs to get the Chinese to localise in Europe and it needs to collaborate with them, particularly around battery technology in order to catch up.”
For workers in the auto industry, in Europe and internationally, neither path is the way forward in a situation where they face a wave of job destruction and wage cutting.
I don’t really know much about this, but this feels wrong.
Why punish consumers, we should be striving to make European cars cheaper not make Chinese ones more expensive.
I’m sure there are many European countries where the government funds progression in other industries.
We also let American companies take control of industries.
Well seems like all car companies are somewhat subsidized/supported. I don’t know how difficult to detangle the presumably many different levels of that are, especially internationally.
But if the EU were to subsidize “just” 500$ per car sold, and China 50.000$ per car, it would be impossible for european car makers to compete on an otherwise equal field.
Now I have no Idea how supported which markets are, and I’d presume I grossly exaggerated the difference, and it may well be the other way around. I have not found detailed analysis of this though.
They don’t subsidise the export cars at all. They subsidise R&D and domestic sales (which in turn gives them more money for R&D as well). They also give low interest loans for setting up new factories that produce green products.
The EU should just do the same.
It is the exact opposite. I do not know how old you are or where you lived the last 20 years but the reason for the tarrifs have a long backstory.
In the late 20th century, china created steel on a mass scale that plummeted the world price for steel to such a low price that every western country lost basicly their entire steel-work industry. While the US had a strong steel industry back then, today it is virtualy non existing (and the root for many right wing delusions). China was able to do this, because china can tell people where to go, how much to pay and subsidize the products to outplay everyone else in the market.
In the late 90s/early 00s, the same happened to the german solar/pv industry. While germany was the market leader, china slashed that by again laveraging their draconic labor market. Germany could have won that battle if they would also had shifted their entire nation to a dystopian, low-wage, authoritarian goverment - but they choosed to stay democratic, pay high wages, have federalism of their states and let the market and the people alone and not intervene into the life quality of their citizens.
The hope for the west was, that with trading china would eventually become more open, more democratic. The exchange of goods and knowledge would bring those two very opposite systems closer together over the long run. After the 2012 election of Xi, it was clear that this was not the case. The strategy failed. China became more authoritarian, closed themself off even more, still did not opened their markets for western companies (owing land, owning companies, freely distributing of goods and messages) and did tightly regulate the players in the market and the target to attack with cheap chinese labor.
Now we are in 2024. The west learned and is fed up with how china erode all the hopes and destroyed these western industries and take a different approach by excluding them from their markets. They try to protect what is left before this is as well ridden down to rubble by the chinese junk prices based on slave labour and the huge poverty layer china still laverages to underrun every world price. China came from a authoritarian communist system and knew they had to adopt the western capitalist thinking. They try to crush capitalism with their own wepaons by dumping the prices to a level, that it outplayes every western countries economies and threatening their social systems that way.
It is only fair and right that the west is not tolerating this any longer, while china raises the fire wall and propaganda even higher, appointed Xi to leader for life and cracks down on public dissent internaly by force, while piquing public dissent in the west by algorithmically spurring dissent externally (in the west) via their media strategies (tiktok, etc.).
You’re telling us how propagandised other countries are, all while subscribing to this Lord of The Rings geopolitical narrative. You muppet.
Should we? We can’t compete with Chinese labor laws and under paying workers
The Chinese auto worker is paid more than a Mexican one. Difference is the Chinese companies aren’t afraid of automation, and it has given them a financial cushion to develop better cars.
The average Chinese worker makes about $2.80 US/hour. What’s the Mexican pay rate?
Also, yes, total bullshit that Mexico is exempt from import tariffs and all our US manufacturers have been moving vehicle production down there.
the calculations that go into figuring out mexican payrates are questionable at best and they’re tantamount to cooking the books.
nevertheless; near shoring isn’t going to work. the mexican government is being strong armed by the american administration to grey rock near shoring as much as possible and i would expect verbiage to continue those grey rocking efforts to show up in the next usmca agreement in the near future.
it’ll be yet another cash grab that serves a few hundred already rich people at the expense of the mexican workers; rural america; the environment; and our future political stability and it will cheered on by the people who claim to want to protect all of those things.