4 ms·

The problem is not that the cars are cheap. The problem is they are cheap because of illegal support from the Chinese state.

winrid 2y ago
That's illegal how? If the US Government, for example, has subsidies for chip production that makes exporting silicon cheaper is that illegal too?
- klooney 2y ago
  Well, you know, they have an effective industrial policy, so it must be illegal.
- yorwba 2y ago
  I wouldn't call it "illegal", but international trade agreements define situations in which it is permissible to counter subsidies with retaliatory tariffs. The EU has retaliated against the US's subsidies for Boeing before, although those tariffs are currently suspended. Tariffs to counter chip subsidies would likely be permissible as well.
reaperman 2y ago
EU and USA also give direct subsidies to vehicle manufacturers. I'm just not buying the narrative that all these huge tariffs on Chinese goods are merely to combat "illegal" subsidies. That implies that Chinese industries are not profitable, in which case -- where is the money coming from? There are large tariffs on nearly every category of good shipped from China. The USA put a 266% tariff on Chinese steel[0]. Is china really only charging the USA 26% of their cost for producing steel? And just eating the other 74% losses? If it was a handful of products, this might make sense but I've seen this "illegal support / dumping" claim for nearly everything coming out of China. If it was all true, they'd be bankrupt! It costs about 10 times as much to build a chemical plant in the USA vs. building it in China. At some point we have to accept that money genuinely just goes further in China, and adapt to that the best we can. Maybe that means consolidation to create greater economies of scale for expensive nearly-fully automated factories, and balancing that consolidation by opening up our markets to real competition from China. Maybe it means using Neo-colonialism to build up competing countries industry who also have large pools of inexpensive labor. Yes, any solution is painful, and perhaps I'd be more accepting of tariffs if they went directly to the right citizens to ease the economic pain of job losses in each sector. At some point though, we have to come to some kind of reckoning instead of burying our heads in the sand and trying to just keep the status quo of everything being super expensive. 0: https://www.industryweek.com/the-economy/public-policy/article/21971307/us-imposes-266-duty-on-imports-of-steel-from-china https://www.industryweek.com/the-economy/public-policy/artic...
DiogenesKynikos 2y ago
That's the official justification given for the tariffs, but the motivation for the tariffs is 100% that Chinese EVs are cheap, and European auto manufacturers are unable to compete on a level playing field. The decision to impose tariffs came first, and the "investigation" into Chinese subsidies came next, in order to justify a decision that had already been made. Once the "investigation" came back with the pre-determined answer, the tariffs were imposed. The subsidies that are being alleged here are the exact same types of subsidies that European countries and the US give to support EV sales. Chinese subsidies are not especially large here, and they're not the reason why Chinese EVs are cheap. Chinese EVs are cheap because the Chinese EV market is extremely competitive, China is good at manufacturing, and Chinese mass consumers can't afford cars at European or American prices. In contrast, major European auto manufacturers have wasted time by continuing to focus on internal-combustion-engine vehicles. Suddenly, they find themselves at a disadvantage in the EV market, so they go running to their governments and ask for tariffs on superior Chinese EVs. Protectionism 101.

winrid 2y ago

That's illegal how? If the US Government, for example, has subsidies for chip production that makes exporting silicon cheaper is that illegal too?

klooney 2y ago
Well, you know, they have an effective industrial policy, so it must be illegal.
yorwba 2y ago
I wouldn't call it "illegal", but international trade agreements define situations in which it is permissible to counter subsidies with retaliatory tariffs. The EU has retaliated against the US's subsidies for Boeing before, although those tariffs are currently suspended. Tariffs to counter chip subsidies would likely be permissible as well.

reaperman 2y ago

EU and USA also give direct subsidies to vehicle manufacturers. I'm just not buying the narrative that all these huge tariffs on Chinese goods are merely to combat "illegal" subsidies. That implies that Chinese industries are not profitable, in which case -- where is the money coming from? There are large tariffs on nearly every category of good shipped from China. The USA put a 266% tariff on Chinese steel[0]. Is china really only charging the USA 26% of their cost for producing steel? And just eating the other 74% losses? If it was a handful of products, this might make sense but I've seen this "illegal support / dumping" claim for nearly everything coming out of China. If it was all true, they'd be bankrupt! It costs about 10 times as much to build a chemical plant in the USA vs. building it in China. At some point we have to accept that money genuinely just goes further in China, and adapt to that the best we can. Maybe that means consolidation to create greater economies of scale for expensive nearly-fully automated factories, and balancing that consolidation by opening up our markets to real competition from China. Maybe it means using Neo-colonialism to build up competing countries industry who also have large pools of inexpensive labor. Yes, any solution is painful, and perhaps I'd be more accepting of tariffs if they went directly to the right citizens to ease the economic pain of job losses in each sector. At some point though, we have to come to some kind of reckoning instead of burying our heads in the sand and trying to just keep the status quo of everything being super expensive. 0: https://www.industryweek.com/the-economy/public-policy/article/21971307/us-imposes-266-duty-on-imports-of-steel-from-china https://www.industryweek.com/the-economy/public-policy/artic...

DiogenesKynikos 2y ago

That's the official justification given for the tariffs, but the motivation for the tariffs is 100% that Chinese EVs are cheap, and European auto manufacturers are unable to compete on a level playing field. The decision to impose tariffs came first, and the "investigation" into Chinese subsidies came next, in order to justify a decision that had already been made. Once the "investigation" came back with the pre-determined answer, the tariffs were imposed. The subsidies that are being alleged here are the exact same types of subsidies that European countries and the US give to support EV sales. Chinese subsidies are not especially large here, and they're not the reason why Chinese EVs are cheap. Chinese EVs are cheap because the Chinese EV market is extremely competitive, China is good at manufacturing, and Chinese mass consumers can't afford cars at European or American prices. In contrast, major European auto manufacturers have wasted time by continuing to focus on internal-combustion-engine vehicles. Suddenly, they find themselves at a disadvantage in the EV market, so they go running to their governments and ask for tariffs on superior Chinese EVs. Protectionism 101.