this post was submitted on 17 Sep 2024
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[Dormant] Electric Vehicles
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Can someone explain to me the implications of China subsidizing a car, and the US putting tariffs on it?
Which country would benefit if I buy it?
The Chinese subsidies artificially bring down the prices of their cars so that other companies can't compete with their prices. The point of the tariffs is to inflate the price of Chinese EVs to make them too expensive to undercut American competition.
The only people benefiting are American businesses and maybe their factory worker, but the American consumer just ends up paying more for everything.
Tariffs are essentially fees paid to government applying the tariff by the customer paying the tariff. So if you're American, you'd be paying the additional cost to the American government
The Chinese supply chain benefits from government money increasing demand by lowering prices of finished goods, without having to lower prices of supply chain inputs.
Tariffs negate the increase in demand by increasing the price of finished goods. If the prices are brought in line with what the goods would have cost without the subsidies, then the Chinese government has spent that money for no gain, and the US government collects that much money by taxing its citizens instead of letting them have cheaper cars. If the tariffs are even higher than the subsidies, the Chinese government's loss is greater, but the US government's gain is smaller - lower demand leads to less revenue for the Chinese supply chain and fewer taxes collected by the US government.
If you buy a Chinese car that has American tariffs placed on it, the only loser is you. China and USA both benefit.
But if that car is still the cheapest EV I can buy, then everybody wins?
If you don't mind seeing Chinese manufacturers taking over another sector by underpaying the people working in those factories...
One of the reasons why cars made in the US and Canada are more expensive is also because the people making them have good living conditions. If you want to see those jobs disappear then go ahead and buy more Chinese shit, don't come crying when China has the monopoly on everything and starts increasing prices in order to get a return on investment on all the subsidies they're currently paying!
It's not a free market if we don't let businesses with crappy business models fail.
If this is about selling livable wages, then that should be part of the marketing of the product. Like bio food.
I also don't believe for a second US car manufacturers are not milking customers with features they don't really need, because there is too little competition.
Japanese car makers do the same in the US market.
Along with European and Korean manufacturers, or pretty much every notable car manufacturer in the world. These people are claiming that every car company in existence is just greedy and trying to screw them over except for some altruistic Chinese state-owned companies because they can't buy a brand new car for an unreasonably low price.
Government subsidies from China isn't free market either.
You want true free market? Alright, salaries will need to be the same as in China to compete, how would you like that? All manufacturing jobs in first world countries are gone, sounds nice right? You should ask people from Detroit how that went.
Yeah, an unregulated market isn't free.
It's literally the most free market possible.
It always becomes monopoly.
One person telling everyone else what's going to happen isn't freedom.
Monopolies and free markets aren't mutually exclusive concepts.
Fair enough. Not all monopolies are bad monopolies. There's a narrow set of circumstances where a monopoly can exist within a market without making that market something other than free.
Government owned utilities for example - natural monopolies that are allowed to exist in a highly regulated state.
Monopsony can also be good for the free market in sectors with inflexible demand, such as healthcare.
But those are exceptions, and not the general rule.
Relax, I don't even own a car.