Trump open to Chinese EV factories in the US, but with some conditions
Keeping Chinese electric vehicles (EVs) out of the U.S. has been a major goal of President Joe Biden’s administration. However, during a speech at the Republican National Convention on Thursday, July 18, former President Donald Trump said he would take a different approach, indicating his willingness to allow Chinese EV makers to establish operations in the U.S., provided that the production plants are constructed and staffed by American workers.
“They’re building some of the largest auto plants anywhere in the world,” Trump said. “We’re going to bring it back. We’re going to make them. We don’t mind that happening. But those plants are going to be built in the United States, and our people are going to man those plants.”
Trump’s proposal is aimed at preventing Chinese companies from building plants in Mexico to avoid the tariffs recently increased by the Biden administration and to capitalize on the federal government’s EV tax credit offerings.
“Large factories just started are being built across the border in Mexico,” Trump said. “So with all the other things happening at our border, and they’re being built by China to make cars and to sell them into our country.”
The former president said that if elected again, he plans to put forth policies to deter Beijing-backed companies from building out their facilities in Mexico. Trump claimed he would consider imposing substantial tariffs on these Chinese EVs manufactured in south of the U.S. border.
“If they don’t agree with us, we’ll put a tariff of approximately 100 to 200% on each car, and they will be unsellable in the United States,” Trump said.
In his speech, Trump also criticized the United Auto Workers (UAW), a union representing over 400,000 automotive industry employees, which endorsed Biden earlier this year, over China’s use of Mexico as a potential way to get its EVs into the United States. He said the UAW should be “ashamed for allowing this to happen,” and suggested that the union’s president, Shawn Fain, should be “fired immediately.”
Germany has become increasingly reliant on Chinese renewable energy tech
Following the disruption of its natural gas supplies from Russia due to geopolitical tensions, Germany is increasingly relying on China to meet its power needs. This partnership has quickly made China one of the most important markets for keeping the German economy running.
For years, Germany heavily depended on Russian natural gas imports to sustain its energy infrastructure. However, Russia’s invasion of Ukraine in 2022 and the ensuing trade sanctions imposed by Western nations have forced Germany to seek an alternative from Chinese-made energy infrastructure.
One of the most notable examples of this shift is in solar energy. Prior to the conflict in Ukraine, solar power accounted for about 8% of Germany’s electricity. In the years since, this figure has surged, at times providing two-thirds of the nation’s power. This rapid increase has been largely facilitated by solar products imported from China, which account for around 90% of Germany’s solar energy infrastructure.
Beijing is now also making inroads into the European nation’s wind energy sector. For the first time, Chinese-made turbines are set to be installed in a German offshore wind farm. The project is expected to power nearly half a million homes.
Meanwhile, German automobile manufacturers — including BMW, Mercedes-Benz and Volkswagen — have invested in production plants in China, capitalizing on the country’s dominance in the electric vehicle (EV) supply chain to reduce manufacturing costs.
However, the recent increase in European Union tariffs on Chinese EVs has sparked concern among these automakers. The German government has expressed support for its automotive sector. German Chancellor Olaf Scholz labelled the new tariffs as “illegal customs barriers” and warned of their far-reaching consequences.
Politicians say Americans don’t pay for tariffs. What do economists say?
The closer it gets to November, the more Americans hear about tariffs, which are on the agendas of both presidential candidates vying for their vote. But is tariff just a fancy word for tax? And who ends up paying? The answer may depend on whether you ask an economist or a politician.
Tariffs were a cornerstone of former President Donald Trump’s economic policy. Since taking office, President Joe Biden has not only kept Trump’s import tariffs in place, he’s added on, particularly with targeted tariffs on China.
The right-of-center Tax Foundation recently tallied up that more trade-war tariffs have been collected under Biden than Trump, with the vast majority of revenue coming from Chinese imports.
Meanwhile, Trump is pitching expanding his tariffs if elected to a second term. One of those proposals is a “ring around the collar,” universal tariff of 10%.
“When companies come in and they dump their products in the United States, they should pay automatically, let’s say a 10% tax. That money would be used to pay off debt, it’s a massive amount of money,” Trump said on Fox Business.
It is definitely a tax and the fact is that it raises the cost of living for everyone when we have more tariffs.
Chris Towner, Committee for a Responsible Federal Budget
In a closed-door meeting with Republican lawmakers in June, Trump reportedly proposed replacing the income tax with tariffs.
According to Investopedia, a tariff is a tax imposed by one country on the goods and services imported from another country. Governments impose tariffs to raise revenue, protect domestic industries, or exert political leverage over another country.
Both Biden and Trump insist tariffs are not a tax on Americans. When the Biden administration introduced new tariffs and a White House reporter asked about concern over tariffs causing increased prices for U.S. consumers, this was the administration’s response.
“I think that link, in terms of tariffs to prices, has been largely debunked,” U.S. Trade Representative Katherine Tai said.
Meanwhile, a Republican National Committee spokesperson told Bloomberg, “The notion that tariffs are a tax on U.S. consumers is a lie pushed by outsourcers and the Chinese Communist Party.”
Straight Arrow News interviewed three analysts from three think tanks across the political spectrum. Each of them agreed that tariffs are a tax and Americans pay for the increased cost of imported goods.
“The truth of it is that it is a tax,” said Preston Brashers, a research fellow on tax policy at the conservative Heritage Foundation. “It is something that gets passed along to consumers, and in some cases, it’s going to be something that’s passed along to producers here in the United States when they’re buying products from overseas.”
“By the most technical basis, it is a tax on imports, right? It is to try to discourage buying imports or to raise the cost of imports,” said Chris Towner, the policy director at the bipartisan Committee for a Responsible Federal Budget. “It is definitely a tax and the fact is that it raises the cost of living for everyone when we have more tariffs.”
The progressive Center for American Progress (CAP) recently did analysis on Trump’s 10% flat tariff proposal.
“I crunched the numbers and calculated that this would raise taxes for a typical family by about $1,500 a year, so every year, they would pay that tax,” said Brendan Duke, CAP’s senior director on economic policy. “I think a really key thing is that they would pay that tax on imported products that we don’t produce in the United States.”
The centrist Peterson Institute for International Economics placed an even higher price tag on Trump’s 10% tariff proposal, saying it would cost the typical American family $1,700 per year.
Of course, economic policies don’t happen in a vacuum. Trump is also planning to extend his 2017 tax cuts if reelected. The Peterson Institute combined the income benefits from extending the tax cuts with two of Trump’s tariff proposals, the 10% flat tax and 60% tariffs on China. The equation showed the bottom 80% of households would experience a net loss in income.
“We have these taxes that are based on people’s incomes,” Duke said. “[Tariffs are] based on people’s spending and we know that low- and middle-income people spend a larger share of their income, while higher-income people actually spend a very small share.”
“There are folks on the left who are really trying to make [tariffs] about a cost of living increase,” Towner said. “It does raise significant revenue. So on the one hand, yes, it raises prices. But really, it’s a flat, across-the-board tax increase.”
“Anytime you’re going to be adding to taxes, as an organization that believes in lower taxes and free trade, it is a question mark as to exactly how we’re going to go about doing that,” Brashers said.
The Tax Foundation said despite higher costs to Americans, both the Trump campaign and Biden administration continue to defend trade war tariffs. They said it’s a gap between the economic reality – tariffs are a tax passed on to American producers and consumers – and political messaging – that tariffs hurt foreign nations and help the U.S. economy.
What do EVs have to do with the price of pork in China? Actually, a lot.
Earlier in June, the European Union (EU) announced a tariff hike on Chinese electric vehicles (EVs), prompting Beijing to warn of potential retaliatory measures. Now, in what has been seen as part of that response, Chinese officials launched an investigation into the prices of pork imported from Europe.
The investigation is a move that could have significant economic repercussions for the EU, given China’s immense demand for pork.
China is the world’s largest consumer of pork. The country expects to account for more than half of global consumption this year. In some Chinese provinces, the average person consumes a quarter pound of pork daily, contributing to the nearly 2 million pigs consumed nationwide each day.
Last year, China spent approximately $6 billion on pork imports. More than 50% of that pork came from the EU.
The EU’s executive branch, the European Commission, stated it will closely monitor China’s investigation and intervene if necessary, downplaying concerns about significant impacts on European farmers. However, China might not be done hitting back at Europe and other nations that have similarly increased electric vehicle tariffs against them.
U.S. Treasury Secretary Janet Yellen said Washington, D.C., is bracing for retaliation over the Biden administration’s own duty hike on Chinese EVs. Meanwhile, market analysts suggested Beijing could also impose tariffs on other European exports, such as wines and brandy, which have been lucrative markets for Europe.
Last year, nearly 70% of Chinese wine imports came from the EU, and China is the second-largest importer of brandy after the United States.
Trump floats more tariffs and eliminating taxes on tips. Here’s the price tag.
The 2024 presidential campaign is in full swing and former President Donald Trump is making headlines with his economic policy proposals. Eliminating taxes on tips is one he introduced while campaigning in Nevada, aiming to gain support from Americans in the service industry who may directly benefit. Another campaign proposal revolves around expanding tariffs on foreign-made goods.
Economists and policy analysts crunching the numbers point out that these policies may run up the nation’s debt even further without significant offsets.
Last week, the former president told a crowd of supporters in Nevada that, if elected, he would do away with taxes on tips. The comment came in a state where 22.9% of workers are in the leisure and hospitality industries, many of whom rely on tips.
“Just common sense would tell you that if you’re going to exempt a certain form of income that is not at the present point in time exempt, that means you’re going to get less revenue,” former U.S. Comptroller General David M. Walker told Straight Arrow News.
While Walker doesn’t necessarily buy the proposal, he did offer how he would change the way tipped employees are handled in the U.S.
“I think that what we ought to be doing with regard to waiters and waitresses and those who rely primarily on tips for their income is we ought to be going to the European model,” he said. “We ought to pay them enough money such that they don’t have to rely upon tips in order to be able to have a decent standard of living.”
The bipartisan Committee for a Responsible Federal Budget found that Trump’s proposal could add between $125 billion and $500 billion to the U.S. deficit over 10 years.
While the prohibition of taxing tips is a relatively new proposal from Trump, tariffs have been in his toolbox since he transitioned from the C-suite to the Oval Office. The Trump campaign said a 10% across-the-board tariff policy would raise billions in revenue to pay for tax cuts, but analysis from center- and left-leaning think tanks show it could cost middle-income families between $1,500 and $1,700 per year.
“If you are going to tariff goods, it is going to affect the price of those goods and so ultimately the consumer is going to end up paying more as a result of those tariffs,” Walker said. “The real question is, in exchange for what? Is this going to be in exchange for a tax cut someplace else? So when you look at it from an economic standpoint, it will have an effect on prices. It’s not a tax, but it will have an effect on prices.”
EU announces tariff hike on Chinese EVs amid ongoing anti-subsidy investigation
The European Union is taking steps to support its domestic automakers who are struggling with competition from China’s low-cost electric vehicles (EVs). In an effort to help the continent’s car companies compete, the EU has announced tariff increases of up to 38% on imported Chinese EVs.
“The influx of subsidized Chinese imports at artificially low prices therefore presents a threat of clearly foreseeable and imminent injury to EU industry,” the European Commission said in a statement.
This tariff hike follows the launch of an ongoing anti-subsidy investigation by the European Commission into Chinese EV prices.
Investigators aim to determine whether the prices have been artificially lowered due to financial assistance from Beijing. Companies cooperating with the probe will face a 21% tariff, while those that do not comply will be subjected to the full 38% duty.
The new tariffs will impose billions of dollars in additional costs on Chinese car manufacturers. Western automakers — such as Tesla and BMW, which produce EVs in China — will also be affected by these increased tariffs.
Beijing has criticized the EU’s decision, warning that it could harm relations between Europe and China and threaten the stability of the global automotive supply chain. China’s Ministry of Commerce accused the bloc of “creating and escalating trade tensions” with this move.
Following the tariff announcement, shares of some leading European car manufacturers fell, reflecting fears of potential retaliatory actions from China.
Despite the EU’s measures, car companies in China remain optimistic. The Chinese Passenger Car Association stated that the tariff hike was anticipated and also predicted it would not significantly impact their automakers. The industry group still foresees considerable growth potential for Chinese-made EVs in the European market.
China’s internal EV war heats up as officials at BYD, Huawei trade criticisms
A battle over electric vehicles (EVs) is unfolding in China, with officials at rival brands BYD and Huawei exchanging some verbal barbs. Huawei recently acknowledged the ultra-low prices of BYD’s EVs, insinuating that these low costs come at the expense of other features.
“We are not good at competing with ultra-low prices,” Yu Chengdong, the chairman of Huawei’s smart car unit, reportedly said at a public forum in Shenzhen. “Rather, we are good at competing with value, intelligence, luxury, comfort, safety, high quality, excellent and comfortable user experience.”
BYD quickly responded to the criticism, challenging Huawei to a direct comparison of their vehicles and going on to suggest a joint showcase of the two companies products. A representative from BYD invited Huawei to present their cars side-by-side, allowing consumers to judge which is superior.
“Personally I have great respect for Huawei,” said Li Yunfei, general manager of branding and public relations at BYD, in a video post on Weibo. “But, I feel that if Mr. Yu can make fewer comparisons, either at press conferences or public forums, more people will like him, and Huawei’s brand would also gain points. We welcome other brands to show their cars at our booth and compete with ours on the same stage.”
In the midst of this corporate skirmish, BYD also took aim at the U.S. and European auto industries. These comments follow the tariff hike imposed by the U.S. on Chinese EVs, raising the duty to 100%. Europe is expected to soon follow suit with its own rate hike. BYD’s top executive argued that these moves stem from fears that Chinese EVs might outperform their Western counterparts.
“There are many examples of politicians in other countries who are worried about EVs in China,” Wang Chuanfu, CEO of BYD, said at a recent industry event. “If you are not strong enough, they will not be afraid of you.”
This exchange comes amid the ongoing price competition among Chinese automakers. The drive to offer the cheapest EVs has led to a reduction in profit margins across the industry. The average profit margin for China’s auto sector has dropped to 5%, the lowest in at least a decade, as domestic brands aggressively vie to outdo each other.
Europe may raise tariffs on Chinese EVs, but Beijing wants to cut a deal instead
The European Commission is expected to announce a new tariff hike on electric vehicle (EV) imports from China, a move that could cost Chinese automakers billions of dollars. However, Beijing may be open to negotiating a compromise in order to soften the blow to its EV sector, which right now stands as the largest in the world.
Currently, Europe’s tariff on Chinese EVs stands at 10% and each additional 10% increment would translate to $1 billion in new expenses for Chinese manufacturers. If Europe follows the precedent set by the United States, where the Biden administration raised tariffs on these vehicles to 100%, the financial repercussions for China could escalate to the $9 billion range.
In retaliation, Beijing is reportedly considering a tariff increase of its own on large-engine car imports from Europe. China has also indicated a willingness to negotiate lowering this duty rate instead if European nations are open to reaching a compromise.
If a significant number of European Union (EU) member states oppose the move within a four month review period, the tariff increase could be nullified and the current duty rate may be reinstated. Should the EU move ahead with this plan to hike duties, the Chinese Foreign Ministry has said it will not “sit back and watch,” as it plans to take “every necessary measure” to protect its interests.
China has been strategically expanding its EV influence across the continent in recent years. Chinese-backed electric vehicle manufacturers have been making substantial investments in Europe, entering markets in countries such as France, Spain, Germany, Italy and Portugal. This growth has positioned China to potentially capture a quarter of the European EV market by the end of 2024.
New hybrid from China’s BYD tops US models, but Americans still can’t buy it
A new hybrid vehicle from Chinese automaker BYD is outpacing American models with its combination of range and affordability, but it is unlikely to reach U.S. consumers anytime soon. This latest vehicle from the Beijing-backed company can reportedly travel over 1,300 miles without stopping. Priced at just $13,775, the vehicle is nearly three times cheaper with the ability to travel more than twice as far when compared to industry averages in the U.S.
The hybrid also boasts a fuel efficiency of about 80 miles per gallon, which translates to some substantial savings for drivers. BYD estimates that owners could save around $1,336 annually on fuel costs. Over a decade, these savings could offset the car’s purchase price, effectively reducing its net cost to zero.
However, American consumers are unlikely to see these BYD hybrids in U.S. showrooms. The Biden administration has implemented a 100% tariff on Chinese electric vehicles, aiming to protect domestic automakers from foreign competition.
This policy is part of broader efforts to maintain the competitiveness of American car manufacturers. The U.S. government also reportedly pressured Mexican authorities to withdraw tax incentives for Chinese EV-makers looking to build factories south of the border, which had been viewed as a potential loophole for companies like BYD to enter the American market.
Eli Electric’s affordable micro-EV coming from China to the US despite new tariff
In the face of recently announced tariffs exceeding 100% on Chinese electric vehicles (EVs) bound for the United States, one automaker remains committed to bringing affordable EVs to American consumers. Eli Electric Vehicles is grappling with the implications of the new tariff rate on its plans to introduce a less expensive electric micro-car in the U.S. The company is headquartered in Los Angeles but has manufacturing operations in China.
“We know there’s a strong, unfulfilled demand for affordable EVs in America,” James Seargent, head of U.S. operations for Eli Electric, said. “We are aware of the tariff communication that came through and I think one of the major components here is that it is an opportunity for us to look at how can we make sure that we are being very efficient with our supply chain.”
The compact dimensions of the company’s micro-car, the Eli ZERO, hold the potential to help the car remain relatively inexpensive.
“This is a targeted tariff on some of the vehicles that came through,” Seargent said. “We’re really evaluating how that fits with us as micro-EV manufacturer, and the [low-speed electric vehicle] space in America, it’s a little bit different than golf carts, but also a little bit different than full-size electric vehicles.”
High costs have long stood as a significant barrier to widespread EV adoption in the United States. Eli Electric sees leveraging China’s dominant EV supply chain as a means to drive prices down. Additionally, the company’s leaders also hope the company can facilitate the transition to electric mobility for American drivers.
“We actually have a subsidiary of our company, Eli Electric Vehicles, in China, particularly to be close to the supply chain,” Seargent said. “It’s the fact that we’re able to be there to see it, to build those relationships, and understand what we should utilize for our vehicle and kind of roll with that EV hub in that area. That’s what it really is going to be set us apart.”
Eli Electric currently manufactures the Eli ZERO, a street-legal vehicle boasting a range of up to 90 miles, in Shanghai. The manufacturer bills the car as an automobile capable of bridging the gap between micro and full-sized cars. The ZERO offers a range of features including power-assisted steering, radar parking sensors, a Sony infotainment system and more. All that comes at a cost of under $12,000. It is a price point which Eli Electric aims to keep steady despite the Biden administration’s new trade rules.
U.S. customers already started reserving their Eli ZERO models through a fully refundable $200 deposit with the company. Eli Electric anticipates a pre-Christmas debut on American roads. The EV manufacturer plans to make the ZERO available through local distributors and dealer partners nationwide.
