(AmericanProsperity.com) – The European Union will make the final decision regarding tariffs they’ve been planning to place on Chinese automakers.
Automakers and countries are divided on whether to place tariffs on Chinese vehicles. A German automotive trade association spoke out saying that this would hurt German Automakers which are all throughout China.
China has been exporting cars to countries all around the globe and supporters of the tariffs and trade have pointed out China’s support for its domestic manufacturers, and that is the reasoning for the tariffs.
The senior advisor and Scholl Chair in International Business at the Center for Strategic and International Studies, William Reinsch, said, “We’re dealing with an economy in China where credit money is allocated by the state and not by the market, and the state picks sectors that they want to promote.”
Reinsch says, “In that kind of economy — if you do that — you always get overinvestment, you always get overcapacity, you always get overproduction, and then that overproduction gets dumped on the rest of the world.”
Chinese automakers can make a car for a little over five thousand dollars, while European automakers can make a car for over twenty thousand dollars.
This essentially would allow Chinese automakers to sell their cars at a much lower cost than European automakers.
“It’s explained by lower labor costs and by the fact that when it’s about electric cars, China, unlike the rest of the world, it has already secured the supply chain for the batteries,” said Felipe Muñoz, senior analyst for JATO Dynamics.
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