Some people predicted the threat of a trade war with China would wreck the US auto industry. It’s turning out to be quite the opposite.
If you didn’t hear, multiple news outlets are reporting that China is looking to relax rules about foreign automakers sharing factories and profits with domestic automakers. Tesla was vocally opposed to the practice, while other automakers like Volkswagen, Toyota, and GM had entered into such arrangements, but not without issues.
First off the hook are automakers producing EVs. To encourage more electric cars in China, the government will allow foreign automakers to whip out EVs inside the country’s borders without a 25-percent tariff, starting this year. All other automakers won’t pay the penalty starting in 2022.
Threats of instituting a similar rule about sharing manufacturing facilities with automakers in the US were floated. That seemed to make a stark point. Elon Musk has been ramping up rhetoric about equal trade rules for vehicles, so he should be especially happy right now.
Automakers from the US and Europe are likely going to pounce on this opportunity. With Chinese automakers flexing their muscles, the tradeoff could be more Chinese vehicles sold around the world.