Tariffs & Electric Cars: Bloomberg Says It’s Time To Welcome Chinese Cars To The US

Sign up for CleanTechnica’s Weekly Substack for Zach and Scott’s in-depth analyses and high level summaries, sign up for our daily newsletter, and/or follow us on Google News!

Tariffs are a hot topic today, as the current administration’s trade policies are roiling many industries. Some of the highest tariffs apply to electric cars manufactured in China, which are subject to import duties of around 102.5%. In case some enterprising Chinese automaker should decide to do an end run around those tariffs by opening a factory in Mexico, there are further restrictions in place to prevent that from happening.

The current interest in tariffs arises partially due to disenchantment with the globalization movement that ruled international trade relations for the past four decades. The heart of globalization was a desire to curb the labor costs associated with producing stuff. If people in Sri Lanka were willing to sew clothing for 20 cents an hour, well, let them! Japan built industrial empires based on manufacturing automobiles and electronics cheaper than Americans could. First world consumers got the benefit of low prices while telling themselves they were lifting workers in foreign countries out of poverty. Naomi Klein did an excellent job of exposing the darker side of globalization in her book No Logo.

If there is an issue with the latest tariffs in the US, it is that building factories and creating supply chains takes years to accomplish. The new tariffs are taking effect within weeks, leading to severe disruptions in several industries. And while the so-called president insists foreign countries will pay those tariffs, any elementary school student knows the people who buy the products subject to those tariffs will ultimately pay for them in the form of higher prices.

Tariffs & The Auto Industry

Still, all politics is local. Bloomberg reports that union auto workers like James Benson, Jr. are solidly in favor of the tariffs on imported vehicles. He said this week he has assembled cars and trucks for Ford for 26 years, during which time he has worked at eight different plants. Three of them shut down while others saw cutbacks as the company lost share to imports. As Benson sees it, Trump’s tariffs are the US’s best chance to reverse a long-running factory drain. “I was a devout Democrat my whole life and got nothing out of it,” Benson said in an interview. “Nobody has done anything to stop the decline until now.”

Benson is right. Every US president since Nixon has been an avid supporter of globalization. But while his enthusiasm for tariffs is understandable, at the same time it is shortsighted. The issue is how to recapture the glow that suffused American society after World War II when cars had tail fins and everything seemed possible. America was an industrial colossus that built more ships and airplanes than any nation in history. Families thrived on one paycheck and rising expectations were the norm. That “Father Knows Best” era of good feeling is in America’s rearview mirror today. Now not only do both parents work, but often they work two — or more — jobs to make ends meet.

Many Americans today are worse off financially than their parents were, not better. America doesn’t make stuff any more. I saw a shipping carton recently for a new air conditioner that was festooned with the American flag. It proclaimed in bold letters that it had been designed, engineered, and assembled in America. What it didn’t say was that is was built somewhere else from parts sourced from all over the world by foreign workers. All that chest thumping was designed to disguise the fact that not a single American worker had anything to do with actually making what was inside the box.

Let Chinese EVs In

Bloomberg’s Colin McKerracher wrote recently that keeping Chinese cars out of the US market may have short term benefits but long term consequences. He pointed out that doing so is restraining the transition to electric vehicles in America while allowing the sales of EV in other countries to thrive. In effect, it is like banning smartphones to protect the US flip-phone industry or holding back a changeover to passenger jets to protect manufacturers of propeller-driven aircraft. Some jobs may be protected, but the country as a whole will suffer.

Brazil saw EV sales increase by more than 500% from 2022 to 2024, Thailand’s EV sales jumped 279% over the same period and Mexico saw similarly rapid growth. In Australia EV sales are up 145% in the last two years. The growth in EV sales in the UK has been more modest, but it is further along on the adoption curve and has the highest rate of EV penetration of all major car markets in Europe. The common thread between all these markets is their relative openness to Chinese automakers, Bloomberg says.

Australia cut EV import tariffs to zero in 2022. Now BYD is the second most popular EV brand in the country with the Shark plug-in hybrid pickup the sixth most popular vehicle sold in March. Brazil also has been open to Chinese imports, with BYD establishing a significant presence in the market. The UK, like Norway, has decided not to impose special tariffs on Chinese EVs, which are now a significant reason why EVs are now near 100% of all new cars sold in Norway.

By contrast, EV sales fell 35% from 2022 to 2024 in Germany and increased only marginally in the US last year. Germany and other EU members have tariffs of up to 45% on Chinese EVs with rates varying by manufacturer. Even in markets where Chinese automakers make up a relatively small share of total EV sales, their presence forces competition and pushes incumbent automakers to put effort into bringing EVs to market. “Companies typically don’t self-disrupt a profitable market. A challenger often is needed to force the issue. Tesla played that role for many years, but the Chinese are now coming on fast,” McKerracher wrote.

Top Down Or Bottom Up?

These sales patterns challenge the idea that EV adoption will be led exclusively by wealthier countries, Bloomberg says. Thailand now boasts better EV adoption rates than the US, while Brazil has jumped ahead of Japan. Electric vehicles started out as a top-down phenomenon, but they’re quickly shifting to a bottom-up trend. “Other factors are at play, with regulations and subsidies in flux for markets like Germany and overall market size also playing a role. But if you want a gauge of which countries will see the most rapid growth rates in EV adoption over the next few years, openness to Chinese automakers might be one of the best indicators,” McKerracher said.

Brazil is planning to re-introduce tariffs on imported cars beginning in 2026 in order to encourage domestic production. That plan is working, with BYD, GAC, and Great Wall Motor all saying they are looking to establish factories in Brazil in the near future. The US could be doing the same thing by encouraging Chinese companies to build factories in America, just as Japanese, South Korean, and German automakers have done in the past — factories that could provide employment opportunities for James Benson, Jr. and other auto workers from generations to come.

What won’t work is for America to cower in fear of foreign competition, as is happening today in the US. A nation that fears others cannot pretend to be great in any sense of the word. In the past, the US never was fearful of anyone. Now it fears everyone. This is not a prescription for success in the years and decades to come.