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Car industry crisis: Automobile workers don't believe taxing Chinese EVs is the solution
(www.euronews.com)
this post was submitted on 20 Oct 2024
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This is confusing. We’re imposing tariffs because China subsidises their EV production in order to kill competition elsewhere and bring even more manufacturing there.
It is important to note that these are western European workers. For them the Chinese competition is largely irrellevant as their companies have been moving production to eastern Europe for a while now and they realize that their problem is structural.
All what the trariffs on Chinese EVs will do is conserve the status quo for European car makers a few more years, which doesn't help western European workers at all.
Ah, right you are. I’m not sure EU common market can be reworked so that it doesn’t happen, at least without central fiscal policy and budget. Tariffs are still needed regardless unless we want to become dependent on our global adversary rather than Slovakia.
I guess the answer lies up the supply chain: Automakers have historically provided well-paid, cushy union jobs to their direct employees. However, that business model has increasingly depended on squeezing the supply chain. E.g. a relative used to work at a automotive supplier around 10 years ago — their blue collar workers got the 8.x€/h German minimum wage while employees at VW in the same region got 3x that plus an assortment of benefits.
At the same time, modern cars include a lot of electronics that aren't even produced within the EU at all (and EV batteries are the worst bit here). Hence, European car manufacturers depend on products imported from China to create functionally and economically competitive cars. A trade war with China could upend that symbiosis.
(Fwiw, you'll also notice that one of the union representatives at the end hints that they want government subsidies of some sort.)
That would be incompatible with EU common market although with the weight of France I guess rule bending is not out of question. This sounds like a viscous cycle though, trying to outspend China which has fiscal and monetary policy built entirely on stimulating domestic growth, at the cost of crazy capital controls.
There are lots of options for legal subsidies. Really, the only issue is whether you can legally specify that you only want to incentivize domestic production (like the IRA does in the US).
Just from my German context, I can name a couple of subsidies that have helped/are helping the car industry, particularly by making it a lot cheaper to own a (new) car: