When Is A Tariff Not A Tariff?

Yesterday various news sources reported that President Biden would be placing tariffs on Chinese electric vehicles and some other products coming into America from China.

MSN reported:

President Joe Biden on Tuesday announced new tariffs on $18 billion worth of Chinese imports, including a sharp tax hike on electric vehicles, to help protect his administration’s investments in key sectors in the United States.

The targets of the tariffs include EVs, solar cells, steel, aluminum, semiconductors, advanced batteries, critical minerals, solar and medical products.

“American workers can outwork and outcompete anyone, as long as the competition is fair,” President Biden said in remarks delivered from the White House Rose Garden. “But for too long it hasn’t been fair.”

Hitting China’s trade policies, Biden said “it’s not competition, it’s cheating.”

“China heavily subsidized all these products, pushing Chinese companies to produce far more than the rest of the world can absorb and then dumping excess products onto the market at unfairly low prices, driving other manufacturers around the world out of business,” he said.

It all sounds very good, but what does it do?

The Conservative Treehouse reports:

Biden might as well be announcing tariffs on Chinese swimming pools flown into the USA via hot air balloon.  There will be more Chinese swimming pools delivered from China than Chinese EVs.  The Chinese EVs come from Mexico.  The tariff is fake.

WHITE HOUSE […] To further encourage China to eliminate the acts, policies, and practices at issue – and to counteract the burden or restriction of these acts, policies, and practices – the Trade Representative shall modify the two actions to increase section 301 ad valorem rates of duty for the following products from China:

    • Battery parts (non-lithium-ion batteries):  Increase rate to 25 percent in 2024
    • Electric vehicles:  Increase rate to 100 percent in 2024
    • Lithium-ion electrical vehicle batteries:  Increase rate to 25 percent in 2024
    • Lithium-ion non-electrical vehicle batteries:  Increase rate to 25 percent in 2026
    • Natural graphite:  Increase rate to 25 percent in 2026
    • Other critical minerals:  Increase rate to 25 percent in 2024 (read more)

None of this stuff is coming from China. It is all coming from Mexico via transnational shipping and Chinese manufacturing in Mexico.

The article notes:

On the EV issue, this tariff approach is politically duplicitous by Biden against the backdrop of massive investment in Mexico by the three largest Chinese EV automakers. Last December, the three Chinese auto manufacturers, MG, BYD, and Chery, announced they were going to spend billions building new EV manufacturing plants in Mexico.  Each Chinese auto manufacturer was going to spend between $1.5 to $2.0 billion.

Those Mexican built Chinese EVs would pass into the USA market under current USMCA trade rules and regulations, as long as they technically meet the material origination rules.  This can make tariffs against the Chinese imported EVs a moot point, because China will be making them in Mexico (North American trade agreement).

One of the reasons President Trump said the U.S. auto industry would suffer a “bloodbath,” is specifically because the current Chinese auto companies are targeting these EVs in the $10,000 or less range.  If you want to see what it looks like when cheap Chinese EVs start to flood a consumer market, visit Russia – the Western sanctions have only increased this flow.  I can see it clear as day.

This is political sleight of hand to encourage voters to vote for Joe Biden. I don’t know if the American voters are really that dumb.

Why We Need To Balance Our Environmental Concerns

No one wants a dirty planet earth. We have an obligation to keep our air and water as clean as possible. However, we also have an obligation to feed, clothe, and house the people who live on earth. Sometimes there is a problem balancing all of that. Right now China illustrates that problem.

The Epoch Times is reporting today that China’s factory activity shrunk in September for the first time since February 2020, following sweeping curbs on electricity usage, according to China’s National Bureau of Statistics (NBS).

China is trying to balance its energy needs with the needs of its economy and the needs of its people.

The article reports:

China is now in the grip of a power crunch as coal supply shortages, tougher emissions standards, and strong domestic demand push up coal prices to record highs. Some generators cut off power to reduce output or minimize losses.

Power rationing is currently taking place in at least nine provinces and regions. Local governments in major manufacturing hubs like the provinces of Zhejiang, Jiangsu, and Guangdong have asked factories to limit power usage or curb output.

Some power providers have sent notices to heavy users to either halt production during peak power periods that can run from 7 a.m. and 11 p.m., or shut operations entirely for two to three days a week.

The article concludes:

The power cut is mounting more pressure on the manufacturing sector.

This week, Goldman Sachs lowered China’s economic growth forecast this year to 7.8 percent from 8.2 percent, citing energy shortages and deep industrial output cuts.

China’s factory output growth also hit a 13-month low in August, NBS recorded.

Yet the September composite PMI, including both manufacturing and services activity, rose to 51.7 versus 48.9 in August.

If nothing else, this illustrates the need to bring the manufacturing sector back in America. Unfortunately the economic policies of the Biden administration will have exactly the opposite effect.