Under the guise “Buy America”, Biden U.S. has built a fortress to keep out Chinese EVs as millions sell around the world. Let’s discuss in detail what that really means.
Why Americans Can’t Buy Cheap Chinese Electric Vehicles
The Wall Street Journal has an interesting article on China’s EV dominance. Unfortunately, the WSJ never gets to the heart of the matter.
Please consider Why Americans Can’t Buy Cheap Chinese Electric Vehicles
Chinese automakers are winning over millions of consumers around the world with affordable electric vehicles. They are conspicuously absent from one big market: the U.S.
Washington has effectively built a fortress to keep out Chinese EVs. Former President Donald Trump imposed a 25% tax on Chinese auto imports. President Biden backed that policy and went further, denying them “Buy America” credits that can reduce consumers’ price tag by thousands of dollars.
These steps have made it virtually impossible for Chinese automakers to compete with vehicles built in the U.S. or imported from friendly nations, even as they rapidly penetrate other markets.
“China is determined to dominate the electric-vehicle market by using unfair trade practices, but I will not let them,” Biden told auto-union workers in Illinois earlier this month. “I promise you.”
China is on its way to becoming the world’s largest auto exporter this year, replacing Japan. It builds roughly two-thirds of all electric vehicles globally and the biggest Chinese EV maker, BYD, made 1.9 million vehicles last year, more than Tesla’s 1.4 million, according to the companies.
Complicating matters is the fact that China has built dominant supply chains for EV batteries and the minerals used to make them. U.S. automakers will inevitably rely on these supplies as they increase their own EV manufacturing to meet the Biden administration’s goal of reducing carbon emissions, said John Bozzella, who heads Alliance for Automotive Innovation, an industry group whose members include Ford Motor and General Motors.
BYD’s popular Atto 3 SUV, a global bestseller that comes with an advanced driving-assistant system and heated seats, is offered at €39,500, or about $43,000. Also popular is the MG5 EV, a larger “estate car” built by a former British brand now owned by Chinese state-owned SAIC Motor. Its price starts from €35,395, or $38,500.
In the U.S., the average EV sale price was $53,469 in July, according to Cox Automotive.
Biden Wants You To Pay the Maximum for an EV
The combination of UAW support and tariffs ensures you will pay a steep price for an EV. It’s the same for solar panels and even European-made trucks.
The US accuses China of “dumping”. Assume that is true.
It is axiomatic that if someone is giving away something for “free” or “too cheap” that someone else is paying. So, if China is indeed subsidizing exports, who is the winner and who is the loser?
The answer should be obvious. China is subsidizing US consumers at the expense of China’s consumers and Chinese taxpayers.
Meanwhile, in the US, Biden appears on the UAW picket line endorsing massive pay raises that further make the US automotive industry uncompetitive.
The Buy America Battle Cry
The “Buy America” battle cry is the same as the “Buy France” battle cry or the “Buy Wherever” battle cry.
It’s a battle cry to pay more and get less.
Fair Trade or Free Trade
The only fair trade is free trade.
But if China wants to subsidize the world (I really doubt it’s happening to the extent proclaimed) Chinese taxpayers are the loser and US consumers are the winners.
Yet, we complain!
US Subsidies
Recall the decades-long tussle between Boeing and European manufacturer Airbus. Trump threated Airbus with huge tariffs. The WTO ruled both were equally guilty.
US military contracts are nothing more than subsidies to the US weapons industry.
Biden’s Inflation Reduction Act is certainly against WTO rules.
Ironically, yet as predicted in this corner, Biden’s Green Energy Inflation Reduction Act Needs a Big Bailout Already
Despite hundreds of billions of dollars the US is throwing at clean energy, wind and solar power projects are still losing money.
EV Bottom Line
When you stand with the UAW, you are begging for higher prices.
Not only does Biden want to force everyone into an EV. He wants everyone to pay $20,000 more for them than they can get elsewhere.
Why Are Americans in Such a Rotten Mood?
People are struggling with rent and putting food on the table. Biden wants to send hundreds of billions of dollars to Israel and Ukraine. And he wants everyone to pay more for cars.
And Biden wonders why people are in such a bad mood. For discussion, please see Why Are Americans in Such a Rotten Mood? Biden Blames the Media
As an aside, Trump’s trade policies were terrible. Biden took those policies and made them even worse.
The Devil We Had Is Better Than the Devil We Got
Trade policies are a classic example of my post yesterday, The Devil We Had Is Better Than the Devil We Got
Voters have a choice between the devil they know and the devil they know. Polls show voters don’t like the choice, but if forced to make a choice between the two, Trump would win.
Article posted with permission from Mish Shedlock
