The rise of Chinese EVs is dividing the West
America and Europe are heading down different roads in response to China’s emergence as an electric-vehicle juggernaut. The U.S. is closing its borders to Chinese EVs before they even launch.
The Biden administration last month raised the total tariff rate to 102.5% on Chinese EVs, despite extremely low imports. Canada, whose car industry is tightly integrated with the U.S., is considering new tariffs too, Bloomberg reported on Friday. In case sky-high import duties don’t keep Chinese EVs away—for example if they are built in Mexico to benefit from the country’s free-trade agreement with the U.S.
and Canada—Washington also launched an investigation in February to assess their security risks. This could be an even more potent blocking tool. If President Biden loses November’s election, a second Trump administration would likely be even more hawkish.
Meanwhile in the European Union, additional tariffs announced by Brussels this month will only slow the influx of Chinese EVs. The products need to overcome consumer resistance to unfamiliar brands, which will take time, but the market is open. The proposed levels of duty are relatively modest: an additional 17.4% in the all-important case of Chinese market leader BYD.
On top of a longstanding 10% tariff, that might close most of the company’s cost advantage compared with European peers, but it probably wouldn’t throw its growth plans off course. Assuming that the company splits the cost impact of the proposed tariff with consumers, Citi estimated that it would still make higher margins in Europe than in brutally competitive China. And the final tariffs could be lower still.
Read more on livemint.com
