this post was submitted on 13 May 2024
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It's very unlikely that Chinese cars are sold at a loss. There is no reason for that to happen when they can be sold at a profit, and quite easily.
But even if they are, that's not necessarily a bad thing. It means Americans can buy cars at far cheaper prices since the price is subsidised by the Chinese government. As the article states, that's equivalent to a wealth transfer from the Chinese taxpayer to the American taxpayer.
What it does do is change the dynamic of winners and losers. The American car buyer would be a winner while the American car maker would be a loser. Now, there are a lot more car buyers and the total boon to car buyers is higher than the total hurt to car makers, meaning the wealth overall in the American economy has increased; it's just that not everyone comes out ahead.
This essentially means protectionist lobbying is usually nothing more than rent-seeking and will usually reduce the amount of total surplus in the economy. Anyone who's taken an Economics 101 course in university can point to the black triangle and say "deadweight loss!"
Allowing China to sell their cars at a loss in the US is definitely a bad thing. It allows China to take over the US market by undercutting the competition. The reason for the teriffs, as far as I understand it, is that the Chinese government is subsidizing the EV manufacturers in an attempt to kill competition and corner the market. It is an anti competitive practice that, if it paid off, would allow China to artificially push other EV makers out of the market, then raise prices when their competition is gone.
It didn't occur in industries where China holds a strong presence, such as solar and other renewable energy equipment, or in lower-tech products available on platforms like AliExpress, Amazon, and eBay. So, why would it be different for electric vehicles (EVs)? Currently, the primary foreign competitor for EVs in China is Tesla, and prices for EVs are decreasing rapidly.
BYD electric vehicles are sold at a significantly higher profit margin in Europe compared to China.
https://finance.yahoo.com/news/eu-unwinnable-price-war-chinese-104847336.html
Thats maybe only true for the US. In Europe, the solar panel industry ist dead, Like the following:
As is most of the Smartphone production, again, outside Design and probably the Premium/sustainable Brands.
Nearly every industry, where you can undercut competitors costs by leveraging economies of scale through pollution and the abolishment of labour laws and human rights