Do you think Elon Musk should be concern about an impending...

Do you think Elon Musk should be concern about an impending tit-for-tat from China?
There is the risk that tariffs could lead to a broader trade conflict between the two countries as they respond to each other’s moves.

China accounts for 40% of Tesla sales...China may not be able to hit Tesla with retaliatory tariffs as the cars are made in China, but China could make it difficult for Tesla to grow its business there. Without China, Tesla's growth is toast. China could stir its populace to shun buying American branded vehicles, as an example.

And China's MIIT has issued a draft to scale back battery production including closing lithium battery plants to address overcapacity issue. This could reduce short term demand for lithium.

US plans to impose major new tariffs on Chinese EVs
Fatima Hussein, Seung Min Kim, Aamer Madhani and Didi Tang
May 11, 2024 – 8.59am


Washington | The Biden administration plans to impose major new tariffs on electric vehicles, semiconductors, solar equipment and medical supplies imported from China, according to a US official and another person familiar with the plan.

Tariffs on electric vehicles, in particular, could quadruple — from the existing 25 per cent to 100 per cent. The plan was described by the people on condition of anonymity because they were not authorised to provide details ahead of a formal announcement.
The tariffs, expected to be announced on Tuesday, come as officials across the Democratic administration have expressed frustration over China’s manufacturing “overcapacity” of EVs and other products that they say pose a threat to US jobs and national security.

Industrialised nations including the United States and its European allies fear a wave of low-priced Chinese exports will overwhelm domestic manufacturing.

On the US side, there is particular concern that China’s green energy products will undermine massive climate-friendly investments made through the Democrats’ Inflation Reduction Act that President Joe Biden signed into law in August 2022.


The additional tariffs also carry some political heft going into the November presidential election. Both Biden and his presumptive Republican challenger, former President Donald Trump, have told voters that they’ll be tough on China, the world’s second-largest economy after the United States and an emerging geopolitical rival.

Biden has defined his policy as “competition with China, not conflict”. He has embraced an industrial strategy that has used government financial support to pull in private investment in new factories and advanced technology, while limiting the selling of computer chips and other equipment to China.

Trump has floated the idea of levying massive tariffs against China in order to reduce the US trade deficit with that country. He has repeatedly claimed that Biden’s support for EVs would ultimately cause American factory jobs to go to China.

Tuesday’s announcement is expected to keep in place some tariffs that were imposed during Trump’s administration, covering about $US360 billion in Chinese goods. The new tax on imports would add products such as Chinese syringes and solar equipment.

There is the risk that tariffs could lead to a broader trade conflict between the two countries as they respond to each other’s moves. China is seeking to create a technological edge and move up the economic chain.

There are some indications that China is cooling its production of lithium-ion batteries used in EVs, cell phones and other consumer electronics at a time when it is facing increasing criticism from the West.

On Wednesday, China’s Ministry of Industry and Information Technology issued a draft rule aimed at “strengthening the management of the lithium-ion battery industry and promoting the sector’s high-quality growth”.

The draft, which was posted on the ministry’s website for public input, says companies should be striving for better technological innovation, higher quality and lower costs, rather than expanding existing capacity.

Lithium battery plants built in restricted farmlands or industrial zones should be shut down, the draft says.

US Trade Representative Katherine Tai is conducting a review of the Trump-era tariffs, and Republican lawmakers including House Ways and Means Committee chairman Jason Smith and Trade Subcommittee chairman Adrian Smith are urging a “swift conclusion” to the probe.

“Continued inaction on the four-year review poses serious risks for US farmers, manufacturers, innovators, small businesses and workers,” they wrote in a letter to Tai this week.

Meanwhile, Ohio Democratic Senator Sherrod Brown said in a tweet on Friday that “Tariffs are not enough. We need to ban Chinese EVs from the US. Period.”

The Biden administration has also said it will investigate Chinese-made “smart cars” that can gather sensitive information about Americans driving them. The Commerce Department in February issued a notice of a proposed rule making that launches an investigation into national security risks posed by “connected vehicles” from China and other countries considered hostile to the United States.

There currently are very few EVs from China in the US, but officials worry that low-priced models could soon start flooding the US market, even with a 25 per cent tariff.

A car model launched last year by Chinese automaker BYD sells for around $US12,000 in China. The car’s craftsmanship rivals US-made EVs that cost three or four times as much — and is stoking fear in the US industry.

The Alliance for American Manufacturing — an alliance of businesses and the US Steelworkers union — released a report in February that says the introduction of inexpensive Chinese autos to the American market “could end up being an extinction-level event for the US auto sector.” The US auto sector accounts for 3 per cent of America’s GDP, according to the report.

The plan for new tariffs was reported earlier by Bloomberg News and The Wall Street Journal.