ELECTRIC VEHICLE TRADE WAR

 IS A US 100% TARIFF ON CHINESE EVS THE ANSWER?

ELECTRIC VEHICLE TRADE WAR

The international automotive industry is on the brink of a transition to a new era of eco-friendly transport, with electric vehicles representing its essential component. Nevertheless, the process is currently under existential challenge due to the United States’ attempt to impose a 100% tax on the import of electrical automobiles from China. Its potential consequences and perils have become an explicit topic of fierce debate in the economic and geopolitical communities, both nationally and globally.

Economic Impact

The 100% tariff on electric vehicle imports from China could lead to significant economic repercussions for American consumers and the auto industry as a whole. According to a study conducted by the International Energy Agency [1], in 2022, 60% of electric vehicles sold globally are Chinese units, including a certain number in the U.S. market. While the aforesaid tariff could maintain a certain number of American auto industry jobs, it may also lead to the loss of jobs for other American industrial sectors related to electric automobile production, due to the increased price.

Political Implications

Ultimately, the 100% tariff on the Chinese electric vehicle imports in the U.S. may have submissive political impacts, notably on the U.S.-China bilateral relations.[2]. At the moment of increased tensions between Washington D.C. and Beijing, the very fact of the tariff imposition as a legal arrangement may create tensions that may lead to an actual trade war

Moreover, the reverberations may affect other countries that will re-arrange trade alliances between the U.S. and China. Some analysts even suggest that countries predominantly importing electric cars from the U.S. will start doing business with China to outweigh the balance even further.

Global Context

TRADE WAR

The proposed effects of this tariff would extend very far, encompassing the rest of the world and bringing forward a significant global impact through both the U.S electric vehicle market and the global deliveries as well as energy which will be vital for world efforts to reduce carbon emissions and source cleaner energy. The coupled effects of all these ripples will create obstacles to the realization of the world’s transition to cleaner energy with less carbon.[3]

In addition to this, it creates an impact on international cooperation in regards to initiatives on the battle against climate change. It will be the realization moment when the nations come to terms with what these protectionist trade models would mean to their clean energy models. The impacts of the tariff are also extensive, outside the U.S. and China, due to the size and level of globalization in the world today where complementation is critical. [4.]

Additionally, some side effects of tariffs, such as rising demand for used electric cars, might ensue or be triggered, for Chinese manufacturers to realign their focus to other markets. Generally, this tariff’s effects on the future of transportation and global sustainability efforts should be the concern of stakeholders.[5].

In summary, the proposed 100% tariff on Chinese import of electric vehicles to the U.S. is complex, and the issue has multiple fronts. On the one hand, the proposed tariff will eliminate the trade imbalance and protect the domestic industries, while on the other hand, it will likely diminish the efforts to promote cleaner transportation and the international cooperative scheme on climate change.

As policymakers, industry stakeholders, and consumers grapple with the issue at hand, it then becomes necessary to consider not only the consequences of short-run economics but also the great political, environmental, and social implications such a decision may hold. It is only through thoughtful analysis and collaborative dialogue that the impact of this proposed tariff will be navigated, and a course set toward a sustainable and prosperous future for the global automotive industry.

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References:

​International Energy Agency’s (IEA) Global EV Outlook report​

​United States weighs hike in tariffs on Chinese EVs -WSJ​

​China’s Battle Against Air Pollution: An Update​

​Tripling renewable power by 2030: The role of the G7 in turning targets into action​

​Biden to Quadruple Tariffs on Chinese EVs​

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