Car industry pleads for delay to post-Brexit tariffs on EVs | Hacker News Reader

Car industry pleads for delay to post-Brexit tariffs on EVs

theregister.com

36 pointsrntn37 comments

> "If the cost of EV manufacturing in the UK becomes uncompetitive and unsustainable, operations will close."

I'm sorry for the UK but they voted for Brexit. Can't take the bad with the good, whatever that might be in their eyes. I don't see why they should receive special treatment.

> I'm sorry for the UK but they voted for Brexit … I don't see why they should receive special treatment.

This is the European Automobile Manufacturers association trying to stop costs of billions from importing cars and parts to the U.K. (and technically vice versa). It’s the likes of BMW and Peugeot that it will hurt.

They’re already in the shitter with the German government stopping subsidies for companies buying EVs and keeping it only for private persons (70% of VW market are companies)

I agree that it'll end up hurting the EU more. BMW, Peugot, Tata (Jaguar Range Rover), Stellantis, and so on can simply move the production of UK-bound vehicles out of Europe to avoid the tariff. (The EU is imposing the tariff, not the UK.)

It probably costs less than 10% of MSRP to transport a car (or the parts) via cargo vessel from China or the US, so prices in the UK will go up less than 10%, and EU's EV automotive factories will need to cut production targets (at the same time as the EU is subsidizing them in order to increase production).

There are a few UK based companies (Aston Martin, Bentley, Lotus, ...) that are probably too small to route around the tariff, but they're all high-margin, and their customers aren't particularly price sensitive.

https://en.wikipedia.org/wiki/List_of_car_manufacturers_of_t...

They should have thought about that before donating to right wing politicians.

Northern Ireland and Scottland didn't.

How long until the UK could stomach a vote to try to go back? The tories won't consider that, but if labor comes back into power, would they want to immediately try to reverse that vote, what a mindfield.

I doubt it would happen in Labour's first term, it would suck up all of their time and energy and give the pro-Brexit crowd endless fodder to attack them with. It could be a second term project, or maybe even a risky re-election bid if they perceive that it might win them enough votes to secure another term.

This is complicated by the fact that the whole process of re-joining would likely take longer than a single term to complete, and the EU is unlikely to start that process until they believe that support for it in the UK is strong enough that the whole thing won't just be abandoned part way through due to a change of policy or party in government.

As an Irish, I sympathize, I would be very annoyed about it personally, but for now at least, you're stuck with decisions of the masses of the UK.

In fairness, some of the people being punished here are the car manufacturers, who didn’t support Brexit, because they knew (and did point out at the time) that stuff like this would happen.

It doesn't really matter since exempting the sectors that oppose it knowing they would be hurt would make every free trade zone exit ideal for the exiting country.

Getting hit on the head because someone held a brick over it and let go isn't a punishment, it the consequence of an action. Car manufacturers aren't being punished, their business is suffering the consequence of an action taken by the British government.

Can anyone explain to me why these tariffs exist? Isn’t free trade mutually beneficial between allies?

I imagine the reason is to punish the UK to disincentivise others leaving the EU, but this seems too simple.

The UK is not an economic ally of the EU. There's a reason why it takes years to hammer out trade agreements.

What is the reason?

The EU applies equal car tariffs to all sources, just as the US does.

The origin of this tariff appears to be a desire to keep electric car production in the EU and stop it being outsourced to China.

This article is about an exception made for cars sold between the EU and UK, which EU manufacturers are failing to meet because they are sourcing too many components from China and elsewhere.

EU manufacturers in the EU, or "EU" manufacturers in the UK? I'm finding the direction of some of these rules hard to follow.

The article says it is about EU manufacturers exporting cars into the UK.

> Top minds in London and Brussels negotiating the deal agreed to "rules of origin" dictating that a 10 percent tariff would apply to any vehicle that was less than 45 percent made in either the EU or across the Channel.

> This overconfidence has failed to materialize, however, with carmakers finding themselves still hopelessly reliant on components from China and elsewhere to meet demand.

So the goal was to allow free trade between EU and UK on vehicles manufactured by either, but EU manufacturers are still sourcing too large a share of components from outside the EU so their vehicles don't fit the tariff exemption.

I understand that, but why is it conditional on anything? Why should the proportion of non-EU components matter?

Because if your goal is to allow free trade between allies (EU and UK, but not China) and a manufacturer sets up a shed in the EU, brings in a car 99% built in China and adds one bolt to it and tries to sell it in the UK as EU-made, then it is circumventing the goal of the free trade agreement.

But in that case, wouldn’t you just focus the tariffs on the 99% Chinese import? Once it is in your trading/ally bloc, wouldn’t it be better for the transactions to be tariff free?

Ideally, probably. But this was a negotiation between the EU and UK and presumably didn't touch rules on other EU imports.

There are other political discussions happening about tariffs on EV imports from China to the EU which might address that as well.

Free trade can lead to a "race to the bottom" in which industry moves to the country with the lowest taxation, lowest environmental standards, worst treatment of employees, worst data protection, etc. and so other countries are encouraged to similarly drop their standards and everything gets worse for almost everyone, arguably, at least in some cases (probably no one would claim that free trade is a bad thing in all cases).

In the case of environmental standards free trade between countries that do not have the same rules and standards makes it harder to prevent a "tragedy of the commons": I think that's another way of looking at it.

Probably an economist could give a better answer.

That's often used to justify tariffs, but the argument does not stand up to scrutiny. I've never heard of a tariff that is based on embodied carbon, percentage of slave labor that went into production of the good, or so on.

Such tariffs would address the issues you are talking about (and also eliminate a significant percentage of global political corruption), but I think they're actually in violation of international law.

The EU’s new CBAM is a tariff that is based on embodied carbon.

All other tariffs aren’t - they are protectionist measures aimed at increasing domestic employment.

> I've never heard of a tariff that is based on embodied carbon, percentage of slave labor that went into production of the good, or so on.

The inherent assumption here is that a trusted body can be established for a reasonable price that will accurately report these numbers so that the tariff can be enforced. This is a bad assumption both because of practical difficulties in many countries (try this in the DRC) and because one must often assume that the trading government is willing to subvert these tariffs.

In practice, the only practical solution is usually a flat tariff paired with diplomacy stating that the condition to revisit the tariff is building trust that these standards will be enforced on both sides.

There must be a mechanism to do so for the EUs carbon based tariff. For countries like the DNC, you could just assume they are not in compliance and apply the full tariff.

Traditionally, it's because some rich groups are trying to rig markets in their favor. Read up on the sugar cartels, and the US corn lobby for the canonical example.

The sugar cartels were (are?) the world's most powerful cartel, but the corn lobby in the US is similarly large. Even after the cartels take their profit cut from artificially inflating the price of imported sugar, it's still cheaper than domestic sugar or high fructose corn syrup.

So, the corn (and probably sugar) lobby paid congress to create massive import tariffs on sugar. Later Coke and Pepsi switched to domestic HFCS in the US in response.

These days, we know that HFCS is one of the root causes of the obesity epidemic, but it would be political suicide to let a 5-10 year reduction in population-wide life expectancy get in the way of the corn lobby's profits.

Similar stories exist for pretty much all tariffs.

For instance, when the Trump admimnistration increased tariffs on China, they also snuck in tariffs on wood from Canada. A very small group of people (that backed Trump in the election) control most of the wood production in the US.

The tariffs created a supply crash of lumber in the middle of the covid construction boom. At some point, the price of a plywood board was above $100 (up from ~$20 or less).

Most of that translated directly into profits for the timber companies. Of course, it also contributed to the housing shortage, but homeless people don't fund political campaigns, so that didn't really enter into the decision making process.

(edit: I realized that was unnecessarily partisan. Biden renewed/expanded the tariffs I'm complaining about.)

> top minds in London and Brussels negotiating the deal agreed

Oh believe me there is nothing top about them minds in London that negociated brexit. Actually I doubt there's any mind involved in this. Anyway, brexiteers got what they want. Enjoy the cake!

Educated at the top schools, perhaps.

Attended the top schools.

It’s The Register, there is no reason to believe that sarcasm wasn’t involved. “Top minds”, indeed.

Tariffs are immoral between nations that arent at war or engaged in evil behavior like what is happening to the Tigrayans.

So now we’re playing climate change war?

"Ow! Please help me, my face is being eaten by leopards!"

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