This article is written by Austin Garcia
It should come to no surprise that the trade relations between China and the U.S. are dwindling due to factors such as Covid-19, mistrust, competition, and overall opinions. Mexico has become the U.S.’s top importer and trade partner, surpassing China’s 20-year streak. The recent surge in electric vehicles and China’s cheap electric vehicles raise questions about the U.S.’s ability to avoid these issues. The answer is complex and not straightforward, making it difficult to make a clear decision.
Former President Donald Trump warned of a “bloodbath” if he loses the November election, expressing concerns about the Biden administration’s electric vehicle policies and the potential impact of Chinese cars on the US auto industry. These remarks were made to gain support from unionized workers in Rust Belt states who are uneasy about Biden’s support for battery-powered cars and trucks. Trump’s words were seen as an example of his embrace of “political violence” by the Biden campaign.
“China now is building a couple of massive plants where they’re going to build the cars in Mexico, and they think they’re going to sell those cars into the United States — no,” Trump said Saturday during a rally near Dayton, Ohio. “We’re going to put a 100 percent tariff on every single car that comes across the line and you’re not going to be able to sell those cars — if I get elected. Now if I don’t get elected, it’s going to be a bloodbath for the whole — that’s going to be the least of it,” he continued, adding: “But they’re not going to sell those cars.”
Trump criticized the leadership of the United Auto Workers union, claiming they “want to do this all-electric nonsense” and inaccurately claimed they are all made in China. However, companies like Tesla and Volkswagen make EVs in California and Tennessee, while others are imported from countries like South Korea, Germany, or even Japan. Tesla, owned by Elon Musk, has several factories in the US and other locations, including hybrid cars. However, no Chinese electric vehicle manufacturer sells consumer-grade cars in the US under its own brand names. Polestar, a Swedish-based electric car maker majority-owned by Chinese company Geely, sells cars made in China in the US. Political leaders in the US and Europe have expressed concerns that cheap Chinese electric vehicles could take over their markets due to a significant price gap. The average price of an EV in the US is around $53,000, while some Chinese EVs sell for as low as $11,000. Although electric vehicle prices in the US are decreasing, the price gap remains tens of thousands of dollars.
Tesla Autobots building a vehicle.
Trump aims to divide union leaders, who are largely aligned with Biden, from their rank-and-file membership. The UAW strike against the Big Three automakers last year was largely driven by concerns about unionized workers being excluded from the electric vehicle (EV) transition, as crucial parts are produced in non-union plants.
BYD (A Chinese electric vehicle manufacturer) plans to build an electric vehicle plant in Mexico to export vehicles to the U.S. to evade tariffs, taking advantage of the renegotiated North American free-trade pact signed by Trump four years ago. However, the U.S.-Mexico-Canada Agreement contains sourcing restrictions that could pose a challenge for BYD to meet. BYD Americas CEO Stella Li insists the plant will focus on local sales, not exporting to the U.S. market.
The demand for container shipping imports from China into Mexico increased by 60% in January 2023, indicating it has become a “back door” into the US. The China-Mexico container route is now one of the strongest tradelanes globally, with 117,000 teu shipped in January 2023 compared to 73,000 teu in January 2023. Annual growth in container shipping between China and Mexico has already increased by 34.8% in 2023.
Electric cars however do offer numerous benefits, including energy efficiency, lower greenhouse gas emissions, lower maintenance costs, smoother driving experiences, and improved local air quality. With advancements in battery technology and charging infrastructure, range anxiety is less of a concern, making EVs a practical choice for many drivers. Additionally, widespread adoption can lead to improvements in local air quality, particularly in urban areas.
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