The Chinese automaker BYD is setting up shop in Mexico. Let’s discuss the ramifications.
The American Journal of Transportation reports BYD Mexico Plant Will Create 10,000 Jobs.
BYD Co.’s plans to build a plant in Mexico will create around 10,000 jobs, which would put it in line with some of the largest auto factories in the country.
The electric vehicle giant is in final negotiations for the location of the facility, with an official announcement expected in the coming months, Jorge Vallejo, BYD’s general director in Mexico, said in an interview Tuesday. He didn’t say how many of those workers would be directly employed by BYD versus contractors or suppliers.
A plant of that size would employ more people than facilities for some other carmakers in the country, like Audi. Volkswagen’s Puebla plant — the largest in the country — employs 6,100 assembly line workers and 5,000 supervisory employees, along with thousands of people that handle parts assembly.
The carmarker is on pace to sell 50,000 units in the country this year, Vallejo said. Last month, BYD launched its Shark hybrid truck in Mexico, just another sign of the country’s growing importance to the company.
Biden’s 102 Percent Tariffs Intensify Fight With Trump
Despite extremely low Chinese vehicle imports, Biden placed a 102.5% on Chinese EVs, Intensifying Trade Fight With Trump.
One day after news broke that President Biden was planning to raise tariffs on Chinese electric vehicles to roughly 100%, Donald Trump moved to one-up his rival for the White House.
“I will put a 200% tax on every car that comes in from those plants,” the former president said at a rally in New Jersey on Saturday, referring to Chinese vehicles manufactured in Mexico. Biden, he suggested, was ripping off his tariff-focused trade agenda. “Biden finally listened to me,” Trump said. “He’s about four years late.”
The White House said the new tariffs would apply to $18 billion in products from China, with EV batteries, critical minerals and medical products among the other goods targeted. The tariff rate for Chinese semiconductors would double by 2025—to 50% from 25%.
Biden’s decision caps years of tortured debate within the administration over the tariffs Trump originally put in place on more than $300 billion in imports from China. Those duties, implemented in 2018 and 2019 and augmented by Biden’s new steps, are now a seemingly permanent feature of U.S. policy toward China.
“These tariffs are the culmination of clashing industrial policies between the two countries and also the looming election season in the U.S.,” said Eswar Prasad, a senior fellow at the Brookings Institution.
No Benefit to US Consumers
Biden has put such huge tariffs on Chinese imports that few if any of these cars and trucks will make it to the US. Trump promises even higher tariffs.
Amusingly, it appears Trump will throw his much ballyhooed NAFTA replacement known as USMCA into the ash can.
USMCA was not the success Trump claimed. If anything, it made matters worse.
EU Tariff Comparison
The EU’s tariffs are modest in comparison. They have proposed 38.1 percent tariffs on imported Chinese EVs starting July 4.
But EU-China discussions are underway so the proposal is not yet final.
The Inflation Reduction Act Will Bite Again
The IRA mandates production in the US and on an escalating scale, for batteries, minerals , and parts to be made in the US.
Also recall, UAW workers at GM and Ford won mammoth wage and benefits contracts.
US Auto Exports
Add it all up and the US will be the global leader in cost. So Mexico will likely export the units Mexicans don’t buy to Europe and South America.
So I am wondering …
What other countries will want to buy our cars? How many US consumers will be able to afford them?
Country-specific auto export data is very stale, dating to 2022, ancient history for China and Germany.
BYD Unveils the “Shark” a Plug-in Hybrid Pickup Truck Built in Mexico
On May 14, I noted BYD Unveils the “Shark” a Plug-in Hybrid Pickup Truck Built in Mexico
The Chinese automaker BYD (Build Your Dreams) announces a 700-mile range PHEV that will be built in Mexico, this year.
We now see that this will bring 10,000 jobs to Mexico, none to the US. And Mexico will produce cars for exports eating into US exports.
Highest Cost Producer
Trump and Biden both insist that US consumer pay the highest prices in the world for cars, and we will.
Silliness like this is why I believe any fall in the rate of inflation will be transitory.
Trump’s Plan to Replace the Income Tax with Tariffs is Economic Nonsense
In response to protective tariffs, US manufacturers will increase prices. This is what they have done historically and there is no reason to think the same won’t happen again.
Other countries will retaliate.
The slowdown in overall trade and the accompanying global recession easily may result in a net decline in income.
On June 21, I commented Trump’s Plan to Replace the Income Tax with Tariffs is Economic Nonsense
Mother of All Stagflations
“This is a prescription for the mother of all stagflations,” Summers said on Bloomberg Television’s Wall Street Week with David Westin in regard to replacing a major amount of income-tax revenue with tariffs. It would also create “worldwide economic warfare.”
I don’t often agree with Larry Summers, but that is my take as well.
76 Percent of Those Under Age 40 Would Consider a China-Model Car
On June 14, I commented 76 Percent of Those Under Age 40 Would Consider a China-Model Car
Despite privacy concerns, a huge majority of young adults would buy a car from a Chinese auto company. Biden wants to stop them. [So does Trump].
At the risk of sinking the global economy, Trump and Biden are in an escalating tariff war with each other.
And Trump fails to understand trade basics. Foreign companies don’t pay tariffs. Either US consumers pay them, US importers eat the costs, or some combination.
In practice, history shows the bulk of the cost is born by US consumers.
Trump needs to be prepared for this question in the debate. I expect he will blow it.
In order to lower the end prices after tariffs that consumers pay, foreign companies may lower their prices and so effectively pay the tariffs at least partially.
all the dems will be driving them they can afford them
I would guess the green new deal will subsidize BYD. Only makes sense with this crazy stuff.
Hmm.. last I checked, Americans don’t want to purchase EV’s from American Manufacturers. Why on earth would Americans then rush to buy Mexican manufactured Chinese EV’s?
Losing proposition all the way around. They either will Never Open and sell 1 EV in America, or they will open, and close back down shortly thereafter with no sales to pay the bills…
I would buy one if they are much less expensive than the current offerings and I live off grid in northern Canada. Electric cars will eventually win out. I have dozens of cordless 20V Dewalt tools that have batteries that are 10 years old and still working. I store my tools outside so if it’s minus 40, the battery is minus 40. Electric cars work fine in cold temperatures which is why China has been running them in their cold cities for many years now.
Electric cars are much more powerful and faster than internal combustion engines so eventually they will be the preference of consumers. Price is the main holdback and not battery range.
That is 100% your opinion. The EV is a decent choice for soccer Moms and commuters but it’s incredibly painful to use as a trip car. I have heard numerous stories of being on “E” in the middle of nowhere after the software sends cars to a charger that is broken or disabled. You cannot buy a tank of charge. You have to tow the car to a charge station for a couple hundred or more.
What is really lacking in this silly discussion of ICE vs. EV is public transit would do the planet a much better service than flipping the fleet of ICE to electric-which is a colossal environmental mess itself. Just because some kid in the Congo had to dig up the minerals for that battery doesn’t mean it’s green
Range and recharge is still an issue in big countries with big space. And how do people in old apartments charge. The infra is not there.
But 100,000 EV sales a week in China.
The world moves on with or without the US
The jobs quote is strictly BYD hype which consists of temporary 6K construction and maybe a couple of thousand assembly and supply chain jobs. All motors, batteries, chassis, and electronics will be exported from China. Almost no charging stations in Mexico. Export to what nations? Brazil, no. Argentina, no. Venezuela, no money. Most will be in junk yards within six years due to under charging and heat. 8 year warranty, sure, pro rated down to nothing. Do not see Mexicams giving up their large American trucks.
Let me add that exterior metal is paper thin on what I call BYDisposable EVs. No sale value after four years. New battery costs more than car sales value.
If no one buys a BYD then there’s no cost to the taxpayer. Start exporting opium to China. Only half tongue in cheek.
Guy showed up this am to pick up some stuff in a brand new 125k Ford rruck. Whatever.
My Tacoma was made in Meh Hee Ko.
So solly. Poor Amelican can’t afford to buy fine quality Chinese car. That OK. We make anyway.
Paper thin exterior metals. No value after four years.
Eliminate the income tax, not tariffs. The founding fathers wisely chose to use tariffs to fund government expenses.
Yeah right. Then they just raise property taxes.
Do you know what taxing authority levies “income taxes”? Do you know what taxing authorities levy “property taxes”?
Benefit to Mexico and the people of Mexico, why does it always have to be all about the US. In any case a benefit to the us could be that there’s not a big need to spend billions of dollars to build the wall🤣
“Foreign companies don’t pay tariffs. Either US consumers pay them, US importers eat the costs, or some combination.
As is often the case, the anti-tariff folks mispresent exactly who pays tariffs. The above statement is 100% wrong. US Consumers always have a choice not to pay a tariff. Tariffs are typically paid either by manufactures who wish to increase their market share, or by importers, or by retailers. or a combination of these, so that the consumer pays nothing. Some manufactures, like Japanese auto makers, choose to build their vehicles in the US, so as to avoid tariffs entirely. A consumer is free to pass entirely on paying any tariff by purchasing a US produced product. That’s what makes tariffs a perfect tax, because payment by the consumer is 100% voluntarily. If the consumer does not wish to pay a tariff, then don’t. No problem. If the Chinese manufacturers do not want to pay a tariff, then build the vehicles here in the US, and no tariff is owed.
Consumers have a choice?, what choice?, the US government stops any competition and American manufacturers raise their prices accordingly… the consumer gets bled to death one way or another.
So manufacturers, or importers, or retailers, or a combination pay the tariffs. And they’re all so generous and kind, that it occurs to none of them to hike prices on consumers. Because they’re running their businesses as charities, or don’t realize that they can charge higher prices and make more profits.
Is that your thesis? That WalMart and manufacturers and importers just hate making money?
What are the alternatives? Let US industry all die at the hands of mercantilism? Subsidize everything at our end like china does? Something else?
war
this is capitalism, there are no alternatives – M. Fisher.
there are tons of alternatives, but no one wants to discuss them.
So you have a country with low labor costs, low material costs, low regulatikn costs and government subdidies. Are not tarriffs an equalizing cost? The China tarriffs shoukd not allow U.S. producers to raise prices as U.S. costs to manufacture are already high.
Finally on Trump tarriffs. Will not happen. Just thrown out there so people will talk about tarriffs. Remember, Trump’s are talk, Biden’s are real. If Trump can not answer in the debate, what do you expect from Biden?
It is inevitable that the US will “merge” with Mexico and Canada at some point in the not to distant future.
We need more states and tax revenues to keep our economic ponzi scheme afloat.
Iceland! They’re practically a US national park. They could at least be a Canadian province – they’re close enough to Canada.
Greenland too! We need more green land.
Greenland for sure.
Trump already tried to buy it during his first term. More importantly, I just read that whole bunch of rare earths were discovered there in mine-able quantities which means we would not need China for them.
Let me guess. You’re a high level process engineer in mining.
Jefferson wanted to take Mexico. So did Aaron Burr. He thought he could be King. Instead, Burr shot Hamilton in a duel for Jefferson, and that was the end of his career.
got NAFTA ?
Carpenter tech (CRS) renewed itself. It’s popping up.
Since BYD is not making any money now, their expansion comes from borrowing money from Chinese banks who don’t care if the money will ever be paid back. For the moment that isn’t important because profits do not matter. At some point it will become a black hole sucking in money unless they can achieve near monopoly pricing power but that depends on free markets and they are less and less free these days. How many companies have we seen who have announced opening large factories in many locations around the world and where these factories end up not being built? The Mexico factory was announced over seven months ago and no ground has been broken yet. Talk is cheap.
Investors testing the waters perhaps?
The trade deficit with China is down to a 15 years higher low, to 2000 level. Mexico, Taiwan and Vietnam will be targeted next. The rust belt has scar tissues that never healed (Johnstown PA), but it recycled and renewed itself. The rust belt rejuvenated itself with industries that are important to our national security. The next president might target particular products instead of countries. He might start with 100%/200% tariffs and cut it down to 30%/50%. He will please workers, China and Mexico and collect gov revenues. Prices will deflate.
There is a benefit. Less reason for 10,000 people to enter the U.S. illegally looking for a better life.
100% from Biden, 200% from Trump. I am OK using tarriffs to negotiate down another country’s tarriffs, but this is just silly. I believe Biden’s policies have crushed the middle class and the poor … and then imported millions more poor … so between the 2, I can’t vote for Biden. But I hope most of Trump’s silly statements are never even attempted to be implemented. I truly wish we could have Gov DeSantis or Vivek … but such is life.
EXACTLY
DeSantis, like Cruz, is a geek…maybe too smart/polished to relate to most people?
Maybe Trump hits that “just right” spot having a dose of Al Bundy, regular guy (he hides his billionaire roots well).
De Santis and Cruz share the “blessings” of the “financier class” who really don’t care if you live or die.
With 6 to 8 million new Mexicans here in the US that will soon be working legally or illegally sending home lots of money from their US jobs China will still benefit from the relative strength of the US market economy and all these silly tarriffs will be bypassed. Mexicans love their trucks. They are useful and virile. Masculine and project an image of control and power. $20 an hour in CA to Mexico to China for BYD trucks and their future finance arm. Mexico will benefit greatly. Our political leaders long ago forgot what is good for the US. Now it’s what is good for their reelection and those that swing that to reality. Will China make a Japan, South Korea or South Vietnam out of Mexico and export their values as well? Time will tell.
“Trump and Biden both insist that US consumer pay the highest prices in the world for cars, and we will.”
Not just for cars. For EVERYTHING.
Of course: Far and away most “we”s, can’t afford to.
So….: No different from any other third world country: “We” just won’t have much. No cars, no real functional roads, no houses, no medical care, no…… That, in practice, is what third world status always refers to.
Facts… Tariffs TAX to save a couple 1000 jobs, again the middle class and poor will pay this tax, the govt can use this new found tax to fight them WARS
And there is more lost opportunity. The import flow in containerized parts, massive in scale, will flow to Mexican ports, not U.S. ports. The warehousing and logistic jobs will flow to Mexico, not the U.S. same for the waterfront labor jobs. And the supply chain for export autos will call at Mexico ports. The auto processing sector in Mexico will benefit….not the U.S. I am disappointed in Biden and his team. They are making decisions that have massive and mostly negative implications. Trump is doubling down on this stupidity. This is what happens when Michigan becomes a swing state. At the national level, we are collectively net worse off!
Can we smuggle in (greymarket) these BVDs from Mexico while on Holiday?
Bring them in along with Avacado’s from Mexico!
The cross-board used-car game gets interesting….