The Wall Street Journal is reporting that U.S. automakers are seeking a workaround to avoid increased expenses resulting from President Donald Trump’s controversial tariff policy: relocating manufacturing to China.
“Four major automakers are racing to find workarounds to China’s stranglehold on rare-earth magnets, which they fear could force them to shut down some car production within weeks,” the Journal reports. “Several traditional and electric-vehicle makers—and their suppliers—are considering shifting some auto-parts manufacturing to China to avoid looming factory shutdowns, people familiar with the situation said.”
Those cars will cost Americans 20% more. And the American car makers will just raise their prices and keep the profits.
There’s an even worse case scenario for the USA on this. To protect the US EV market, there was a prior tariff of 100% on Chinese EVs which largely priced them out of being brought to the USA. With these reciprocal new Chinese tariffs, the increased costs could get closer or even achieve price parity with USA made EVs. So a Chinese EV could be the same price as a USA made one, but worse yet, the high import tariffs the USA would get from the US imposed EV tariff would be collected by the US government. This means that trump would actually be incentised to encourage the Chinese EV (with its massive tariff adding to government coffers) over a USA EV which gives his government nothing execpt brownie points with his base. Encouraning the Chinese EV path also screws Musk, who is currently criticized trump. We know how much trump cares about his voters, so I’m seeing trump take the Chinese EV path.
Trying to apply logic to any future (let alone current) actions of this administration is an exercise in futility.
Oh I didn’t say trump’s action’s were logical. I’m pointing out possibly even worse consequences to his stupid administration’s actions.