American Media Talks about Electric Vehicle Tariff: America, stop pretending to be a victim and go to solve the supply chain problem

On May 17, U.S.A Foreign Policy Magazine recently wrote an article《 The U.S. Should Stop Playing the Victim Over China Trade 》Said that although the United States has improved its tariff To 100%, and tariffs on batteries and key minerals to 25%, but these measures are unlikely to prevent the impact of Chinese electric vehicles on the U.S. market. The reason is that these tariff measures have not fundamentally changed China's competitive advantage in the field of electric vehicles and batteries, especially in terms of cost, quality and innovation.

The article further discusses how China has become a leader in electric vehicle and battery technology through conscious industrial policies and national support. The article criticized the short-sighted and inconsistent policy of the United States in dealing with electric vehicles and battery technology, especially in terms of government support.

The article calls on the US government to recognize the seriousness and complexity of the current situation, and suggests that it adopt more sensible and diversified strategies, such as strengthening international cooperation and investment, and developing the competitiveness of domestic battery and mineral industries through public procurement and training. Such a strategy not only helps to improve the position of the United States in the global battery industry chain, but also helps to ensure its long-term economic security and technological innovation capability.

The following is the translation of the article:

It seems that the United States is gradually losing its comparative advantage (in economic terms, if a country produces a certain commodity at a lower cost than other countries, then it has a comparative advantage. This does not mean that the country is better at doing this than others; it is more efficient than producing other commodities). Against this background, President Joe· Biden (Joe Biden) decided to impose new tariffs on Chinese imports, including tariffs on electric vehicles of up to 100%, and batteries and key minerals of 25%. Is this move really what some people say, because of China's irregular behavior?

This statement really makes people feel tired of listening. Even if it is true, such high tariffs have clearly touched the bottom line of trade rules. It is worth noting that the United States has not lodged a complaint against this issue with the World Trade Organization (WTO), while China has lodged a complaint against the US subsidies for electric vehicles, pointing out that there are "localization" requirements that violate WTO laws. In fact, the underlying reason for the US tariff increase may more reflect the fact that it is completely surpassed by China in the field of batteries and electric vehicles, not only in terms of cost and quality, but also in terms of innovation.

Now is the time to face up to this reality and analyze in depth how the United States got there. The United States should stop portraying itself as a victim and seek a way that can not only safeguard national security, but also promote energy The sustainable development path of transformation. Judging from the current situation, these tariffs will undoubtedly increase the burden on end consumers and slow down the pace of the US energy transition.

So, how did the United States get there? Looking back, we can find that in the 1990s and early 21st century, western countries shifted their economic development focus to the service industry, focusing on high-value links in the supply chain, such as research and development, brand, design and marketing. A large number of low value manufacturing operations are outsourced to other countries, including China.

However, the western countries once arrogantly believed that China would always stay in the primary stage of manufacturing industry and could not enter high-end fields such as design, research and development and marketing. But facts have proved that China has made remarkable progress through deliberate industrial policies and continuous efforts.

When the United States and european union In the case of disputes over biofuels or disputes over fuel economy standards, the Chinese government has already taken electric vehicles as a priority development area in 2007, and strengthened the security policy for key minerals in 2011. In order to further ensure the stability of the supply chain, China has also invested heavily in supporting enterprises to invest in countries rich in mineral resources through the "Belt and Road" initiative.

At the same time, while the Chinese government is moving forward from manufacturing to battery innovation, the US government is moving in the opposite direction, which is largely due to the failure of the US photovoltaic module supplier Solyndra.

Although Solyndra received a large amount of subsidies from the US government, he finally declared bankruptcy, which triggered political anger from both parties. However, this anger is more based on political motivation, because no risk assessment can be perfect, and innovation is always accompanied by the possibility of failure. Acceptance of failure is an indispensable part of the process of innovation.

Unfortunately, after the Solyndra incident, the US government chose not to support A123, which had not yet emerged at that time. As a result of this decision, A123 technology finally entered China, where it developed into today's lithium iron phosphate battery. The key minerals required for this battery technology have been greatly reduced, and now it has occupied about 40% of the global market share.

As far as the current situation is concerned, China not only firmly controls the important supply chain, but also has achieved good results in product quality. These two issues are unavoidable realities for the US government. Both the Trump government and the Biden government have full reasons to worry about China's dominant position in the supply chain of key minerals and batteries.

In fact, Chinese enterprises have produced more than 60% of important battery components such as lithium, graphite, cobalt and nickel, and about 80% of cathode, anode and battery units. Even if an ally like Canada has a similar dominant position in the supply chain, the United States will be alerted.

The United States is actively seeking to diversify its supply chain, which is undoubtedly a wise move. Although China's incentive measures have successfully promoted the production of domestic batteries, especially in large factories, the effect of these measures is not significant in the middle reaches of battery manufacturing.

In order to address these challenges, Columbia University and the U.S. Department of Energy jointly held a round table meeting with industry leaders and investors, and reached very convincing conclusions.

China occupies an undeniable leading position in this field. It is not only competitive in raw material cost and quality, but also has unparalleled productivity advantages. This capacity gives China huge pricing power and the ability to maintain its market share, posing a challenge to the diversification efforts of the United States and other countries.

The United States also faces other obstacles in supply chain diversification. For example, access to financing depends to a large extent on reliable off take agreements. However, potential investors usually take a cautious attitude towards commitments when they do not see practical financial support.

To be sure, the US Department of Energy has been working hard to support these projects, which has been recognized by the supply chain and investors. However, there is still great uncertainty about the future support and industrial policies of the U.S. government, especially in the context of Donald Trump's possible re-election as president.

Political polarization and the powerful influence of lobbying groups have obviously affected the development trajectory of the United States. At the round table, investors said that the inconsistency and uncertainty of policies and China's strong competitiveness were their main concerns when investing in North American projects.

Therefore, investors are not enthusiastic about investing in North American projects at present, because of high risks, high interest rates, complex licensing procedures and fluctuations in battery commodity prices. According to the forward-looking assessment not yet released by the International Energy Agency (IEA), China is expected to maintain its significant advantages in the supply chain by 2040.

In seeking policy options to improve the competitiveness of the United States, tariffs may be part of the solution, although they may trigger a trade war and fundamentally undermine global efforts to mitigate global warming.

For a long time, the United States has criticized China's export oriented growth strategy, especially in strategic sectors such as the automobile industry, which employ a large number of workers. It is reasonable for the US government to protect these industries, but there is a clear difference between protecting an industry and maintaining competitiveness in this industry.

One possible intervention in the United States is to set a price floor for the middle reaches of batteries, similar to the price floor strategy used in agriculture. This will significantly change the financial landscape of the private sector. Although this policy may be costly, it can effectively promote the diversification of supply chains.

Other policy measures may include adjusting market access and pricing mechanisms to reflect different production methods. In the early 1990s, WTO members ignored the importance of production methods. Now correcting this error may help to establish more reasonable standards in key mineral trade agreements.

However, the United States may also be able to find inspiration at home, and even learn lessons from China's development experience. China's rise is driven by a series of plans and goals, but because of the political environment in the United States, lobbying groups are often able to easily overthrow sound industrial policies after the change of government. This strategy is not feasible in the United States at present.

This is indeed regrettable, because such authorization policies have been proved to be effective. For example, the EU set the goal of meeting 25% of key mineral demand by 2030 through recycling, which greatly boosted the confidence of the industry.

The United States can also learn from China's successful public procurement policies, especially in the promotion of electric buses. In addition, significant investment in labor development is necessary, especially since training in key mineral and battery sectors remains a major challenge for the United States.

The US government must realize that the current situation is unprecedented and cannot meet the challenge only through "protectionism and fiscal consumption". The high cost will not only be borne by consumers and the government, but also this strategy is difficult to effectively curb China's rapid progress in the battery field.

More importantly, the United States needs to face up to the fact that innovation is no longer its core competitive advantage in this field. As the leader of global battery manufacturing, Ningde Times has up to 18000 R&D personnel, which is promoting the innovation frontier that American enterprises cannot reach.

Therefore, the United States should seek in-depth cooperation with international partners for two reasons: first, to diversify its supply chain, and second, to explore how to prevent China from taking advantage of its dominant position in the supply chain.

This strategy should cover strengthening the mineral security partnership, which is a national alliance led by the United States and committed to making more investment in key mineral projects worldwide to improve supply security. At the same time, the United States should make more active use of international development finance companies for direct investment. Finally, it is also important to reach closer mineral agreements with countries such as Brazil, India and Indonesia, which should give priority to supporting products with higher social and environmental benefits.

This is particularly necessary because in many countries, the local basic conditions in developing the competitiveness of specific minerals and battery modules may be better than that of the United States, which has the potential to compete with China. These countries can use the assistance of the United States to enhance their competitiveness, which will be more beneficial to the United States in the long run. (small)