Not happy with the 100% tariff on Chinese EVs, the Biden administration in the US has launched another wave of restrictions aimed at stemming the inexorable march of Chinese EVs into Americaland in an attempt to save US manufacturing jobs.
Everyone knows that American labour is expensive so if you are in an industry where costs have to be kept to a minimum then making things in the good ol’ USA is a losing proposition.
Earlier this year the US government slapped 100% tariffs on all Chinese built cars in an attempt to stop them undermining the indigenous car industry, Europe and Canada followed suit with smaller tariffs, all of which just encouraged the Chinese to look for potential alternative manufacturing sites in Mexico, which has a free trade agreement with the US, and eastern Europe where labour rates are traditionally lower than the rest of EU.
To close this loop hole the US Commerce Department is slapping tariffs on any vehicle that has Chinese tech inside of it, they will also stop the consumer claiming the USD7500 EV subsidy for any vehicle with Chinese components.
Politicians, business leaders and the Unions all fear that the onslaught of cheap Chinese cars could cause an extinction level event for the US car industry. But will it?
The US car industry has been gradually losing jobs ever since the onslaught of the Japanese Car manufacturers in the late 1970’s. To compete they have gradually moved jobs and the supply chain into lower cost centres particularly Mexico to the point where very few American cars can actually be viewed as American any longer.
This level of protectionism shouldn’t sit well with a country that believes in a free market economy, but that is politics for you. Competition spawns’ innovation is the theory but how do you compete when Chinese authorities are subsidising their vehicles by massive amounts? The Chinese EV companies are already over capacity for their own market and with the subsidies they get are probably dumping products in other markets just to get the subsidies that are allegedly on offer from State and National Government.
Job protectionism has been a common theme in the run up to the November US elections but the Commerce Department is citing security concerns as being the main driver to the most recent round of tariffs.
To back this, the White House in a press release stated that there was already ample evidence of Malware within critical American infrastructure, although they didn’t say what or where, and certainly didn’t mention any evidence that Chinese cars are being used to spy on Americans as they go about the daily routine.
Competition should be welcomed, it keeps innovation going and prices low, but it has to be fair. The chances are though that with the EV industry being seen as the future of personal transportation that the stakes are too high to assume that everyone has the same sense of decency.
