Are Chinese Electric Vehicles on the US Market Inevitable?

Chinese electric car manufacturer, BYD has garnered attention for the cheap price tag on its electric vehicles and their success in penetrating the global market. Widely sold in south and central America and dominating 10% of the European electric vehicle market, BYD’s regional Mexican head, Jorge Vallejo recently announced BYD’s plans to establish a manufacturing facility in Mexico, which would not only facilitate their South American sales, but geographically situate them to enter the United States market.  BYD’s success is attributed to their design efficiency, in-house sourcing, superior battery technology, and notably, government subsidization, and both US auto makers and the Federal Government have noticed.

Imports of Chinese vehicles into the United States are not currently prohibited, but until late 2024 have been assessed with a 27.5% duty (now 100%) on top of the standard ad valorem tariff rate. Still, the low price these vehicles are sold for would mean the additional tariffs, even at the current rate, would be unlikely to represent a deterrent should BYD attempt to enter the US market.

As of September 27, The Biden administration has already raised the additional tariff on Chinese vehicles to 100% and proposed a ban on Chinese hardware and software used in internet-connected vehicles. In the meantime,  presidential candidate Donald Trump has explicitly stated he would impose new tariffs to target Chinese vehicles from Mexico importing into the US, and even suggested amending USMCA to ensure they are not conferred special treatment under that free trade agreement.

Whatever administration obtains to the white house in 2024, BYD is likely to find escalating deterrents obstructing their US trade as the federal government moves to protect its domestic market.

Allyn International’s service suite includes consultation on current and developing issues in the US trade community. Reach Allyn Here for a consultation or, contact us sales@allynintl.com or 239-489-9900.

Contributor: Andrew Dosher

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