Tariffs Give U.S. Automakers a Fleeting Chance

[Passages]

The Biden administration is protecting its investment in a domestic auto industry. Domestic auto producers have to rise to the moment.

BY DAVID DAYEN MAY 14, 2024

The Biden administration is announcing today that it will quadruple tariffs to 100 percent on electric vehicles exported from China. Officially, this and other targeted tariff increases (incorporating lithium-ion batteries and battery parts, semiconductors, solar cells, ship-to-shore cranes, certain steel and aluminum products, medical supplies like needles and personal protective equipment, and a handful of critical minerals) were determined after an investigation into China’s widespread use of forced technology transfer and theft of intellectual property. With respect to EVs, the U.S. wants to save a critical industry.

The industry has to cooperate in its own survival, of course. U.S. automakers have lobbied for protection from Chinese competition and relaxation of federal requirements to transition to EVs. They got both, but neither relieves the pressure to move toward cleaner engines. In the 1980s, the government created breathing room for the Big Three automakers to fight off competition with Japan; they spent the time engaging in joint ventures, becoming more efficient companies, and making better cars. With even more pressure from within now, that exact spirit must animate the industry, or the government won’t be able to stop them from failing.

Some observers don’t see the Chinese auto industry as a threat, but a major opportunity. Cheap EVs from China could bring electrification to a larger class of auto purchasers, and more rapidly transition the transportation sector, they say. It’s counterproductive to the Biden administration’s climate goals.

https://prospect.org/economy/2024-05-14-tariffs-give-us-automakers-fleeting-chance/

[Voltaire2]

1. Chinese manufacturers have an advantage because

they invested successfully in advanced battery technologies and because China strategically invested in foreign sources of battery raw materials long before anyone else did.

Domestic manufacturers, with the exception of Tesla and the other ev only manufacturers, basically did nothing for decades until Tesla sold a million units, then they decided they needed a piece of that. Instead of investing in ev tech they invested in advertising to persuade us we needed massive SUVs and pickup trucks to drive our kids to school, commute to work, and fetch groceries.

Tariffs are a reward for idiotic business decisions.

[Passages]

2. Yes, and I hope they don't blow the opportunity Biden is giving them.

[Voltaire2]

3. They will.

Why wouldn't they? We will just bail them out again.

[Passages]

4. I don't know for certain. I see the industry risking a lot more than a bail out if they

fail their customer base, which gets younger all the time.

[Voltaire2]

5. Ford, for example, 'invested' 500M in stock buybacks last year.

The domestic manufacturers have figured out how to be very profitable with little competition by selling huge passenger vehicles that are basically US only. They will keep doing that while keeping their toes in the ev market and persuading the government to block competitive vehicles using tariffs.

[Passages]

6. We'll see. Their game plan may not work out as it has in the past, things

do change even if they are at times incremental.