Brace for the onslaught of Chinese EVs and Trump’s tariff
Published: 03 Dec. 2024, 19:43
Tectonic shifts are underway in the global automaking landscape amid the rise of Chinese EV power. Chrysler parent Stellantis announced its chief executive, Carlos Tavares, is stepping down with more than a year left in his term to answer for the blistering dents in the top and bottom lines. The multinational group was created in 2021 as the fourth largest automaking conglomerate. Workers at German automaker Volkswagen went into strike after the auto giant announced streamlining plans to close at least three factories in Germany and cut the wages of existing staff by 10 percent.
The wreck of the European automotive sector owes largely to the flood of formidable Chinese EV options leveraging the continent’s green transition. Foreign brands lost ground in China after local marques gained steam backed by the government’s subsidy. The local brands then made strong inroads into Europe. According to JATO Dynamics, Chinese brands took up 18.2 percent of the EVs sold in Europe in the first half, up 5.1 percentage points from a year earlier. In reaction, the European Union recently finalized heavy countervailing duties on Chinese EVs benefiting from Beijing’s subsidies.
China’s EV powerhouse, BYD, is poised to tap Korea’s passenger-car market next year after a successful occupation of the bus market. BYD, which started as a battery maker, produced more than 3 million units of EVs last year and is eagerly pushing its shipments offshore. Price-competitive Chinese brands now dominate the commercial car and bus market in Korea.
The EU is hoping to curtail the influx of Chinese EVs with duties, but this option is not as feasible for Korea. When Korea levied safeguard tariffs on Chinese garlic flooding into the market in 2000, Beijing’s punitive action went as far as barring imports of Korea’s two major exports at the time — cellular phones and polyethylene. Automakers also must deal with Trump poising to fully weaponize tariffs.
Trump vowed to slap a 25 percent tariff on all imports from Canada and Mexico on his first day back in the Oval Office to fix illegal immigration and drug problems. In short, an FTA with the United States cannot protect Korea. If Trump acts on his campaign threat to impose a 20 percent tariff on Hyundai and Kia cars produced in Korea, their operating profit could fall by up to 19 percent, according to a S&P Global report.
Automobiles are Korea’s second biggest export item after semiconductors. Korea cannot afford a setback with the economy’s path projected at an under 2 percent growth for the following year. Companies are responsible for staying competitive in a rapidly-changing environment. But the government has a responsibility to protect and help local companies so that they are not handicapped in the global field. Corporate players and the government must brace for tougher game play.
The wreck of the European automotive sector owes largely to the flood of formidable Chinese EV options leveraging the continent’s green transition. Foreign brands lost ground in China after local marques gained steam backed by the government’s subsidy. The local brands then made strong inroads into Europe. According to JATO Dynamics, Chinese brands took up 18.2 percent of the EVs sold in Europe in the first half, up 5.1 percentage points from a year earlier. In reaction, the European Union recently finalized heavy countervailing duties on Chinese EVs benefiting from Beijing’s subsidies.
China’s EV powerhouse, BYD, is poised to tap Korea’s passenger-car market next year after a successful occupation of the bus market. BYD, which started as a battery maker, produced more than 3 million units of EVs last year and is eagerly pushing its shipments offshore. Price-competitive Chinese brands now dominate the commercial car and bus market in Korea.
The EU is hoping to curtail the influx of Chinese EVs with duties, but this option is not as feasible for Korea. When Korea levied safeguard tariffs on Chinese garlic flooding into the market in 2000, Beijing’s punitive action went as far as barring imports of Korea’s two major exports at the time — cellular phones and polyethylene. Automakers also must deal with Trump poising to fully weaponize tariffs.
Trump vowed to slap a 25 percent tariff on all imports from Canada and Mexico on his first day back in the Oval Office to fix illegal immigration and drug problems. In short, an FTA with the United States cannot protect Korea. If Trump acts on his campaign threat to impose a 20 percent tariff on Hyundai and Kia cars produced in Korea, their operating profit could fall by up to 19 percent, according to a S&P Global report.
Automobiles are Korea’s second biggest export item after semiconductors. Korea cannot afford a setback with the economy’s path projected at an under 2 percent growth for the following year. Companies are responsible for staying competitive in a rapidly-changing environment. But the government has a responsibility to protect and help local companies so that they are not handicapped in the global field. Corporate players and the government must brace for tougher game play.
with the Korea JoongAng Daily
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