China Has Gotten the Trade War It Deserves
theatlantic.com
theatlantic.com
Yes, you're going to feel this in your 401k and your iPhones and Xboxes will get more expensive. Chinese manufacturing is the albatross yoked around America's neck; the sooner we address the problem the sooner we can recover from our mistake.
The whole point was to band every single trading partner and rival of China into a trade alliance against it. It would have had way more juice behind it, come at a time before things like EV subsidies, and wouldn't have directly cost American consumers anything!
I'm trying to believe the story that subsidization is creating unfair competition. But right now the Chinese Foreign Ministry explanation of comparative advantage looks more consistent with the numbers?
BYD received billions of dollars in funding grants from the Chinese government. The government also pays raw materials manufacturers to dump materials like steel and lithium on the domestic market at a loss.
The government tax break on the sales price of the vehicle is not really what's relevant here.
The billions in funding (~2) for BYD is what I was discussing regarding about $1k/vehicle subsidy.
I would be very interested in any data you have regarding the amount of money the Chinese government has paid toward raw materials that have been consumed by BYD. Do you have a source you can link?
Secondly, I think you are vastly underrating the difference in "structure". If I was to pay you $100 an hour and give you a company credit card to go buy lunch, that's a much different proposition than asking you to go buy me lunch on the promise that I will reimburse you later. Corporations with a direct government investment are always going to have market advantage beyond just the price difference over companies that have to seek debt or investors.
Here's an HBR writeup on Steel subsidies, specifically relating to the government paying the energy costs: https://hbr.org/2008/06/subsidies-and-the-china-price
Here's an article about the battery glut - there is 4x as much capacity planned as there is estimated forecast since the government guarantees their debt: https://www.ft.com/content/b6038e51-7b5b-4f97-a5da-9202e7156...
This does not even begin to cover how the party provides political protections for the executives of these companies, or how the government aids these companies in stealing intellectual properties from trading partners.
I'm very interested in hard, quantifiable numbers. I've read lots of articles that have various types of qualifications/characterizations but they don't help. For example, the fact that China's economy is producing 4x the battery capacity as domestic need is forecast - in terms of competitiveness what does this mean for BYD? Does it amount to their being able to sell a car for $10 cheaper? $100? $1000?
To put it another way: Each company only ever produced one car and sold it in the US - no tariffs. A Tesla buyer would receive $7500 from the US government and Tesla would receive $0. A BYD buyer would receive $7500 from the US government, and BYD would have already gotten $3 billion dollars from the Chinese government.
It's not at all an apples to apples comparison.
Is it just a "subjective point of view about an apples-to-oranges comparison" or is there a very clear way to objectively base the criticism of China?
> I think ascribing a unit price to the Chinese government's grants is what is misleading.
Could you expand on this? I do not understand it.
This may be a moot point though. Before Telsa gets this $7.5k, Tesla gets a subsidy of $1.5k in regulatory credits per vehicle from the US government for producing electric vehicles (around the same / more than BYD gets per vehicle from the Chinese government).
>Rather, tariffs fall on the American importers of Chinese goods, who often pass those cost increases onto American consumers. That means every time Trump raises tariffs, he risks raising costs on families and businesses.