Isn't it over and China owns this market anyway? How can any other country possibly compete?
So now what?
Yeah, that's kinda how Cuba winds up with everyone (well, the small portion of society who can obtain one) driving 1950s cars around. It's not a good approach.
Doing it to to yourself is a special sort of stupid.
Import limitation is more catered towards saving local economy and minimise dependency.
They trade, limited by their own poverty, with countries that can't be easily bullied by the US.
But it has to be said: the entire car market in Cuba is few thousands cars per year.
Canada and the EU trade fine with Cuba. Spain alone accounts for 20% of the trade.
In fact, both EU and Canada have regulations that prosecute any European and Canadian company that complies with foreign embargoes (Council Regulation (EC) No 2271/96 for Europe and Foreign Extraterritorial Measures Act for Canada).
Of course US can pull its gigantic economic and financial levers to out-out specific companies to choose "you either sell here, but don't sell in country X" like it has done with ASML, but it can only push so much.
US laws apply to US citizens and companies.
You're right. But trade in US Dollars with other countries need to go through US banks, which can be subject to prohibitions, which can be done by political motivation.
Also, the issue of the PetroDollar complicates things internationally as well. US throws a tantrum when small countries (or countries it can bully) trade Oil in other currencies. That is very important to keep themselves relevant and with some control over international trades.
Yet another aspect is that if any goods, regardless of who is selling it, contains more than 10% of components, technology, produced by a US company, such seller requires an US Export license to trade such goods with Cuba.
So it's not as simple as that.
https://shippingsolutionssoftware.com/blog/products-subject-...
It has rarely worked in history, and when it did, it only did so for very short specific time frames intended to kickstart a sector, never to protect it in its mature state.
Examples are south korean and japanese post ww2 protectionism of key sectors, but again, only to kickstart them. Those very sectors had to compete globally quickly to survive.
We're in capitalism, capitalism is about competition and efficiency.
The moment you're shielding your local companies all that happens is that they can raise prices and have even less incentives to compete and innovate.
And I don't buy the "but China fuels money into their EV industry" either.
So what? How many incentives, bailouts, manufacturing credits, sales credits etc do the European and US industries receive regularly?
And why would I care if Chinese taxpayers subsidize my car? I really don't.
Stellantis, a 20B market cap auto conglomerate has received more than 200B euros in help by the Italian government across the last 3 decades. And what did it achieve? Nothing.
Just made the fiat group less relevant, less competitive, and didn't protect jobs in the long term anyway.
Well, you’re wrong. There’s not much else to say bout that.
> And why would I care if Chinese taxpayers subsidize my car? I really don't.
Because it prices the vehicles below points where others can compete. Then they go out of business, and then the remaining winner raises prices. If you are Germany, Japan, or the United States that means lots of bad things for jobs, and starting a new automaker to bring down high prices later is very difficult.
It’s like, who cares if Amazon or Walmart comes in to your country, subsidizes the prices, and then runs all the competition and small mom and pop stores out of town until you have nothing left but Amazon or Walmart. Right?
That's an opinion, not a fact.
> Because it prices the vehicles below points where others can compete.
This is way too expensive for something like that to last. The rush to the bottom is already killing so many chinese automakers locally. The idea that they can sustain such a money bleed globally is hard to believe.
It’s not an opinion. You’re welcome to go read China’s own self-published strategic plans on this or a litany of news and policy journals discussing this.
> This is way too expensive for something like that to last.
How can you claim it’s too expensive if you’re claiming you don’t even buy that it’s happening??
> The rush to the bottom is already killing so many chinese automakers locally. The idea that they can sustain such an money bleed globally is plain asinine.
Look at German automakers in China for a view of the future.
As Chinese automakers compete and then consolidate they’ll raise prices of course but the level of competition and capacity build out will still have them underpricing other automakers due to economies of scale, cheap labor, and advanced manufacturing. They don’t need to sustain it really, globally they’re already poised to win which is why US, EU, Japan are going to have a lot of import controls, tariffs, and will utilize other tools to protect domestic industries.
I didn't say they don't prop their carmaking, battery or ev industries. I said that I don't buy the argument it's bad for us.
> They don’t need to sustain it really, globally they’re already poised to win which is why US, EU, Japan are going to have a lot of import controls, tariffs, and will utilize other tools to protect domestic industries.
Protectionism historically only helps industries in their earliest stages when you need to kickstart them, never when they are mature.
At the end of the day western consumers and workers are always left with the bill if they cannot compete. It's us who will end up paying twice the amount for cars that aren't competitive, and don't have incentives to compete because they are protected anyway.
You also need to understand I'm European. Not American.
German/Italian economies are strongly export dependent. Exports amount for 50% of german economy and 30%+ of Italian one.
Protecting internal markets achieves little to nothing, which is why Germany and Italy were among those less willing to tariff chinese cars.
US has a giant internal market and is not a good exporting economy, it's core exports are financial and IT services.
And I explained why it was bad for us.
> Protectionism historically only helps industries in their earliest stages when you need to kickstart them, never when they are mature.
Never is a strong word. You're assuming that the Chinese EV industry isn't still in the kickstarting stages. The goal is to, via subsidies and capability to deindustrialize other parts of the world. Through that lens you can see their actions quite clearly.
As a European you should be particularly worried if you value labor. When you say things like German and Italian economies are export dependent it begs the question: what happens when those exports to their #1/#2 export market (China) collapse, and then China - because as you said of course Germany and Italy aren't willing to tariff Chinese cars - comes in to the EU and then outcompetes German and Italian automakers too?
What does that leave you with? It leaves you with:
China - dominating EV sales and a massive player in the auto market.
America - protected domestic industry that's not reliant on exports, little to no competition from China
Japan - serving US/EU global markets and protecting domestic industries
Europe - Collapse of industrial capacity to make vehicles, maybe with tariffs or import controls will have workers at Chinese factories making cars (with profits and capital of course heading back to the home market). Follows the British model a bit with focus on luxury automobiles (Ferrari, Aston Martin, things like that)
And in China its barely 20%. But most of German and Italian exports go to other EU countries so its not exactly a fair comparison. Not quite the same but not that different to trade between different US states.
https://www.vda.de/en/news/facts-and-figures/annual-figures/...
Number of cars exported to China seems very low based on this? Even lower than Belgium...
But let's say China develops these markets and they can afford more cars. That's great. That means after China develops them, Western countries can come in and sell their cars too at China's developmental expense. Seems like a win-win all around.
What's the median income in Africa, and how much is the cost of a new Chinese EV that is supposed to be sold in Africa? I'm not sure, do you happen to know?
> The western auto manufacturers are turtling up via protectionism, and they are no longer aiming to compete on their products.
Chinese automakers were/are subsidized by the CCP (including "investment" deals via Belt and Road), it's a response to that. Even today China requires joint ventures for western automakers to operate in China (to my knowledge). China already turtled up via protectionism.
When you say western automakers aren't aiming to compete on their products what do you mean? The quality of the vehicles? Capabilities? Cost? All of the above?
Africans are poor but Chinese EVs are cheap. What’s more, they can earn more with better tools, like Chinese EVs and Chinese investments in green energy. If you’ve been to a bunch of poor countries you know how it works by now. Yes, $10k is a lot of money in those places, but it isn’t a horrible amount of money and is realistic for lots of non-rich people.
> Chinese automakers were/are subsidized by the CCP (including "investment" deals via Belt and Road), it's a response to that. Even today China requires joint ventures for western automakers to operate in China (to my knowledge). China already turtled up via protectionism.
Yes, thats definitely fair. But they didn’t turtle up, they innovated and developed new tech instead. The difference is that China used protectionism to catch up, the USA is using protectionism to…be lazy and dumb. Which one do you think will pay off?
> When you say western automakers aren't aiming to compete on their products what do you mean? The quality of the vehicles? Capabilities? Cost? All of the above?
Yes. Germany has the best bet of catching up, the American auto corps have been dying for a couple of decades now and are probably beyond help. Japan (not western, but usually included) made dumb bets on hydrogen that it still isn’t walking back.
No, that's not how this works.
It's either a correct fact or an incorrect fact. And if you don't know whether it's correct or incorrect, that doesn't mean nobody does, and it certainly doesn't mean it's an opinion.
An opinion would be "I think the way China is subsidizing its EV production is bad."
Protectionism can help when you want to develop an industry.
But it never works for mature ones.
Tesla is literally the first mover.
Volkswagen group sells 30 EVs. Both Mercedes and BMW have 8.
Stellantis has at least a couple dozens.
Unprotected, western EV manufacturers die on the spot. Which is fine by me, until the Chinese don't have to compete on cost anymore, and can dictate the price.
To claim that what they need to succeed is less protectionism is a misunderstanding.
The issue with car industry at least in Europe is not price. This is the last branch that is more or less alive, employs a lot of people and generates added value domestically. If it’s ceded to China, that means that you are at the next stage of deindustrialisation. From where we stand, it looks like that would mean economy collapse and crisis that we haven’t seen since… ever? If this is the way, we’ll have to figure how to live without relying on jobs as the way to survive (ubi, resource-based economy, etc). Since this is not even on the horizon, keep the tariffs for now, thank you.
EVs are so different that the know-how of the combustion engine power automobile industry does not extend to them. In fact, it can be detrimental.
Electric cars? Nope.
VW (and their other brands) and BMW have good new EVs coming to market now, while Toyota is waking up too. They will survive I think. Stellantis though, not sure about them. And many Chinese carmakers will be gone too.
All they have to do is hide some remotely activated punches inside the black box battery that can start off the chain reaction. Drive into a military base at full speed, activate the punch, and cause mass confusion, chaos and destruction.
And then do that many times all at once, with helpless drivers stuck inside right before you invade an island nation you claim ownership of.