Chinese EVs stalled by US, EU import controls as analysts warn this is ‘just the beginning’
- Moves from the US and European Union to control import of Chinese cars, particularly electric models, seen as first salvo in a larger stand-off
- Analysts predict more restrictions on the way as governments look to protect domestic industries and limit China’s market share
The US government is increasing its scrutiny over imports of Chinese-made motor vehicles, especially electric variants, joining Europe in jousting with China over suspected breaches of labour laws – all while working overtime to protect domestic industries, analysts said.
Washington’s concern became evident on Wednesday when, according to the Financial Times, US customs offices impounded thousands of European cars because of the inclusion of a Chinese subcomponent, which authorities said was a violation of its laws against forced labour.
The action by US customs complements federal and state subsidies for electric vehicles (EVs) made in North America and probably foreshadows further measures in this vein, said Yan Liang, chair of economics at Willamette University in the United States.
US tariffs on automotive imports from China remain “high”, she added, with EVs levied at 25 per cent.
This is only going to increase, both in Europe and the US … this is just the beginning
Washington and Beijing have sparred over trade and technology for the past six years, raising tariffs on a wide range of goods.
US Commerce Secretary Gina Raimondo said last month that China’s EVs could create risks because they collect information about the drivers.
The US measures create “a way to favour domestically produced EVs [and] make it harder for US companies to source parts in China or use Chinese imported components”, Liang said.
01:11
China’s BYD overtakes Tesla as world’s largest EV maker
“This is only going to increase, both in Europe and the US,” said Alicia Garcia-Herrero, chief economist for Asia-Pacific at French investment bank Natixis.
“This is just the beginning, and it will affect Chinese autos and other green tech industries.”
American and European officials are probably coordinating their resistance to Chinese automotive imports, said Chen Zhiwu, chair professor of finance at the University of Hong Kong.
“It [cannot] be a random accident when both the EU and US now pay a lot of attention to cars coming out of China,” he said.
It is unclear, however, how heavily “forced labour” weighed on the actions by US customs reported by the Financial Times, Liang added.
She said claims of forced labour usually apply to less value-added goods, such as clothing, which go through fewer steps in the transformation from raw material to finished product.
US government references to “forced labour” often concern the Xinjiang Uygur autonomous region. Beijing has repeatedly denied the allegations.
EU climate demands set to erode Chinese EV makers’ export edge: expert
The German carmaker said in statement emailed to the Post on Thursday it was “working to rectify” a US customs issue, which it described as a “delay”.
“This relates to a small electronic component – part of a larger control unit – which is in the process of being replaced as parts arrive,” the statement said, adding Volkswagen is taking “very seriously” allegations of forced labour violations in-house and in the supply chain.
Volkswagen has been “investigating” a sub-supplier and eyeing the “termination of a supplier relationship if our investigations confirm serious violations”.
The whole rationale … is as political as it can be
Forced labour may have been used to build a test track in 2019, Agence France-Presse reported, citing a German business newspaper.
“The whole rationale behind US ‘forced labour’ legislation is as political as it can be,” said Zha Daojiong, a Peking University international studies professor.
“Instead of doing anything to positively contribute to improvement in [global] labour conditions, it forces all businesses on a supply chain to respond to an accusation that has little if anything to do with the specific product being traded.”
Production of new energy vehicles in China increased by 7.5 million units to 8.3 million from 2017 to 2023, while exports expanded by 3.8 million units to 4.9 million, Bill Russo, CEO of the Shanghai-based consultancy Automobility, said in a state of industry review for last month.
