China has become a powerhouse in electric vehicles. Its automaker BYD recently topped Tesla in global EV sales, with Elon Musk warning of Chinese carmakers, “If there are no trade barriers established, they will pretty much demolish most other car companies in the world. They’re extremely good.”
On Friday, the Alliance for American Manufacturing sounded the alarm, issuing a report entitled: “On a Collision Course: China’s Existential Threat to America’s Auto Industry and its Route Through Mexico.”
The report, which lists policy recommendations to combat overcapacity and unfair trade practices, notes that BYD is building factories in Thailand and Hungary designed to be regional export hubs. It then adds:
“More alarming, however, are Chinese firms’ heavy spending on plants in Mexico, through which they can access the United States by way of the more favorable tariffs under the United States-Mexico-Canada Agreement (USMCA). This strategy is, in effect, an effort to gain backdoor access to American consumers by circumventing existing policies that are keeping China’s autos out of the U.S. market.”
If US automakers are so expensive that they cannot compete, they cannot compete. As simple as that.
Chinese workers make like $900 USD a month. It’s why everything they make is cheaper to make. All the parts that they manufacture that would be assembled in Mexico are made by people making $600 a month, and now the assemblers in Mexico will be getting around $800 a month.
I don’t think we should even be allowing imports of vehicles through Mexico from companies that aren’t Mexican. Same for anywhere else (including US assembling vehiclesin Mexico and sending them to US for sale). Then I also think the tarrifs should offset all the labor costs from parts, manufacturing, and assembly, minus true cost to have vehicles shipped.
The US labor force shouldn’t get left to the dust because we need more than $800 a month to have a fair wage. Imports need balanced out to totally offset costs so anyone making a vehicle doesn’t have to go the cheapest labor route/country to win. Keep the competition fair so people in the US can keep jobs.
You know…if we taxed a few folks to stave off the world’s first trillionaires, we could maybe afford something like UBI, and it’d be easier to compete.
Or, we could use the ever-increasing profit margins we see every quarter to invest in workers instead of investing in investing so we could pay a decent wage without making a car cost as much as a house should.
We won’t do either. Instead, we’ll start another trade war and make a surprised Pikachu face when that makes everything yet more expensive.
I’m fine with a trade war, as things are entire industries in the US have been disappearing because it’s cheaper to have China make it and ship it here because of labor costs and our tax system sucks.
Ok…but a trade war doesn’t fix either of those things. That’s not my opinion. Trump tried the trade war route with China. We didn’t start building more here; we switched to more expensive imports. I agree about the tax system generally, but I don’t see how it relates to a trade war.
Of course we didn’t start building stuff here with what trump did. Everyone knew it would be temporary. Odds are it would be over quicker than you could build a facility. Let alone make a profit back on it.
You want something real to stick in a trade war, you’d have to make it last at least 20 and not possible to have undone.