Despite Trade Barriers, Chinese EVs Will Pose Major Threat To American Automakers, Say Experts: 'Picture A Modern Day Godzilla'

While Chinese electric vehicles (EVs) have been gaining popularity globally, their entry into the U.S. market has been notably restricted.

What Happened: A report by the Wall Street Journal sheds light on the trade barriers set up by the federal government, which have effectively limited the presence of these affordable EVs in the American automotive landscape.

Initiated by former President Donald Trump, the 25% tariff on Chinese auto imports has been a significant hurdle. This policy was further reinforced by President Joe Biden, who also excluded Chinese EVs from the advantageous "Buy America" credits.

These measures have created a challenging environment for Chinese automakers to compete in the U.S., contrasting with their growing market presence elsewhere.

Despite these obstacles, the global influence of Chinese automakers continues to expand, raising concerns among U.S. officials about the long-term effectiveness of these trade barriers.

"China is determined to dominate the electric-vehicle market by using unfair trade practices, but I will not let them," Biden assured auto-union workers in Illinois in November.

China's automotive prowess is evident as it is set to surpass Japan as the world's largest auto exporter. BYD, a leading Chinese EV maker, produced more vehicles last year than Tesla Inc. TSLA, highlighting the scale of China's automotive industry.

Michael Dunne, CEO of ZoZo Go, emphasized the vast reach of Chinese EVs, noting their absence in the U.S. market.

Also Read: US-Sanctioned Chinese Tech Giant Aims To Make EV 'Superior To Tesla Model S'

“Picture a modern day Godzilla with the power to trample on and destroy anything that gets on his path,” he told the Wall Street Journal, adding that there are more than 100 countries where Chinese EVs are sold. “The only market where Chinese have not yet really begun a big assault is right here in the United States.” 

Meanwhile, U.S. lawmakers, including Rep. Mike Gallagher (R-Wis) and Rep. Raja Krishnamoorthi (D-IL) of the House Select Committee on the Chinese Communist Party, have advocated for expanded tariffs on Chinese autos. They believe that Chinese manufacturers will eventually be able to absorb the additional tariffs.

Brian Janovitz, chief counsel for China trade enforcement at the U.S. Trade Representative's office, highlighted the importance of proactive measures against the influx of Chinese EVs, drawing lessons from past experiences in other industries.

While U.S. automakers, including Ford Motor F and General Motors GM, are keen on slowing the rise of Chinese EVs, they also recognize the complexity of potential retaliatory tariffs from China, according to the Wall Street Journal. 

John Bozzella, head of the Alliance for Automotive Innovation, pointed out the reliance of U.S. automakers on China's dominant EV battery supply chains.

Chinese automakers are adapting by planning to assemble EVs in or near the U.S. to circumvent tariffs. For instance, Polestar, owned by Geely and its Volvo unit, is set to start production in South Carolina next year. Other manufacturers like Chery are establishing plants in Mexico.

Wendy Cutler, vice president of the Asia Society Policy Institute, warned of the potential for market saturation, as China has the capacity to produce millions of autos annually.

"All the signs of our market being flooded are there," she told the Wall Street Journal.

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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