Chinese electric carmakers may be crying foul over the European Union’s imposition of additional tariffs, but they have several options to keep growing, including shifting production to the continent and using fat profit margins to absorb some of the hit.
Companies could also turn their attention to new markets in the Middle East, Latin America and Southeast Asia, where EVs comprise a small but growing segment of the passenger car market.
The European Commission on Wednesday formally notified automakers including BYD Co., Geely Automobile Holdings Ltd. and MG owner SAIC Motor Corp. of the additional levies on battery electric cars, which will take tariffs to as high as 48% from next month. China’s EV manufacturers have been pushing more aggressively into Europe amid a domestic price war and years of building a lead in the technology.
“As Chinese automakers grow stronger, it’s natural for them to face trade actions like tariff increases,” said Cui Dongshu, secretary general of China’s Passenger Car Association. “Even if there’s suppression of cars exported from China, automakers are not going to be defeated by the added tariff. Instead, it will only make them stronger.”
BYD shares jumped as much as 8.8% in Hong Kong trading Thursday, leading gains among Chinese EV makers on a view the added tariffs are manageable.
EVs made in China, such as BYD’s Dolphin compact crossover and the MG 4, fetch roughly double on average in Europe compared to their home region, customs data show, giving the manufacturers a cushion against the new tariffs.
The Middle East has emerged as a new market for China’s EV makers too, including Chery Auto, Xpeng Inc. and Geely’s premium Zeekr brand. Nio Inc. Chief Executive Officer William Li earlier this month said the EU’s tariff push was going in “substantially the wrong direction” and the company will start expanding to the Middle East later this year.
Europe’s tariff hikes will have a “minor impact” on Chinese manufacturers because the region accounts for only a fraction of their total sales, according to Daiwa Securities analyst Kevin Lau. Europe contributed between 1% to 3% of overall sales for BYD, Geely and SAIC in the first four months of this year, he estimated.
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*The European Union has approved the imposition of a surcharge of up to 35% on imports of Chinese electric vehicles. *
Unless there is a last-minute agreement with China, this surcharge will be implemented from the beginning of November 2024. The context is as follows: achieving carbon neutrality requires doing without fossil fuels, with #oil being the most widely used of them. In terms of individual mobility, this will involve in particular (although not exclusively) electric cars. In other words, the global automobile industry will have to evolve quickly and profoundly to move from thermal engines (on which the EU has know-how) to electric vehicles. For the European Union, it is a question of not losing its manufacturers in this forced transition, while China (and the United States, but that is another subject) strongly supports its industry. In other words, through various levers, the State and especially the Chinese provinces help their manufacturers, which allows them to offer less expensive vehicles than European manufacturers. Historically, the EU has been satisfied with this situation by only seeing the consumption aspect: if it is cheaper because it is subsidized by a third State, it is advantageous for the European consumer. However, this situation is harmful to European companies, which pay salaries to consumers… It is also a loss of strategic autonomy and a worsening of dependencies, the most flagrant example of which is the production of photovoltaic solar panels, a devastated industry in Europe. Since Covid and the war in Ukraine, a change of approach has been felt. The EU has become aware of its fragility and the need to fight against dumping from third countries, even if some Member States find it to their advantage and try to block this type of measure. Hence the imposition of a surcharge on imported Chinese vehicles. There will certainly be retaliatory measures from China, but China’s dependence on Europe to sell its production, while the American market is increasingly closed, gives the EU leverage. In the event of an escalation towards a trade war, some heavily indebted Chinese provinces could find themselves in a complicated situation and the restructuring of overcapacity sectors would lead to serious economic and social problems. And China knows this. In short, the strengthening of European trade policy is welcome. The challenge is to find a more balanced relationship with China, in which our manufacturers could compete in a more balanced way than today. The sustainability of European industry – and the strategic autonomy it provides – depends on it. More reading on this topic: Source: Maxence Cordiez original in French Language
How do U.S. car producers based in the United States, other foreign car producers in the United States, European Car Manufacturers selling cars in the United States, and other Asian car producers selling or/and manufacturing cars in the United States, all these car manufacturers react and consider the arrival, establishment and expansion of Chinese made cars and Chinese EV cars and trucks and buses in the United States and Europe and Africa, Latin America and the Middle East.
What is going to be the scenario, the new global, local, regional, and national trends and perspectives of the competition in the car industry around the world given the rise of Chinese Cars
Chinese car brands still need to be added to the US market, but Chinese-made cars are still sold in the US.
• Americans bought 104,000 Chinese-made cars in 2023 and nearly 28,000 in the first quarter of 2024.
• Buick, Lincoln, Polestar, and Volvo all sell US cars made in China.
What some people may not realize, however, is that tens of thousands of cars manufactured in China are sold in the US every year. Volvo’s S60L sedan was one of the first Chinese-made cars to be sold in the US starting in 2016, followed by Buick’s Envision SUV and Cadillac’s CT6 hybrid.
US consumers purchased more than 104,000 Chinese-made vehicles in 2023, up 45% from 2022. Americans bought another 28,000 Chinese-made cars during the first quarter of 2024.
Buick, Lincoln, Polestar, and Volvo sell Chinese-made vehicles in the US. Of those, the only Chinese-made EVs come from Polestar, a brand owned by Volvo and its parent company, Geely. The EV brand imported just 2,217 cars in the first three months of 2024. Polestar is expected to start production in South Carolina this year. Will the U.S. government discourage the domestic output of Polestar? Source: Gene Detroyer
Together, the plants, one located in Tennessee and two in Kentucky, will enable more than 120 gigawatt hours of U.S. battery production annually and displace more than 455 million gallons of gasoline per year for the lifetime of the vehicles powered by these batteries. The project is expected to create a total of approximately 5,000 construction jobs in Tennessee and Kentucky, and 7,500 operations jobs once the plants are up and running.
This effort supports President Biden’s Investing in America agenda to onshore and re-shore domestic manufacturing of technologies that are critical to reaching a clean energy and transportation future. Expanding domestic production of American-made batteries is critical to reaching the Biden-Harris Administration’s goals to have EVs represent at least 50% of all new car sales in the U.S. by 2030, reach net-zero electricity by 2035, and a net-zero economy by 2050.
As with all conditional commitments that LPO offers, it’s important to note that the expected U.S. Department of Energy (DOE) loan will only be issued pending the satisfaction of certain conditions, including final legal, contractual, technical, and financial requirements that the conditional commitment specifies.
Uncle Sam’s clean-energy push is giving Ford a major boost. The Energy Department has awarded the automaker a massive $9.2 billion loan to fund the construction of three EV battery plants.
a move Bloomberg reports is « by far the biggest government backing for a U.S. automaker since the bailouts in the 2009 financial crisis. »
The U.S. is trying to reduce its battery reliance on China, which has dominated the market for years and has roughly 80% of the world’s manufacturing capacity. Ford, which made about 132,000 EVs in 2022, hopes to produce 2 million of the vehicles by 2026.
The plants — two in Kentucky, one in Tennessee — are already in the works as part of BlueOval SK, a partnership between Ford and South Korean battery firm SK On. The total projected cost is $11.4 billion.
The U.S. Energy Department said Thursday it plans to lend up to $9.2 billion to a joint venture of Ford Motor and South Korea’s SK On to help it build three battery plants in Tennessee and Kentucky, a record-setting loan for a vehicle supply chain project. The conditional commitment for the low-cost government loan for the BlueOval SK joint venture comes from the government’s Advanced Technology Vehicles Manufacturing (ATVM) loan program. Jigar Shah, the head of the loan program office, told Reuters the loan could close as soon as within 10 weeks.
SCOOP: Ford Motor Company & South Korean battery maker SK On are getting a $9.2 billion loan from the US Department of Energy for three battery plants under construction in Kentucky & Tennessee. It’s a watershed moment in the US race to catch China in green vehicle technology.
Community colleges in Tennessee and Kentucky stand to benefit from the government’s $9B+ investment in battery production. New workforce development and academic programs, as well as re-tooled facilities, will be needed to support the 7,500 operations jobs associated with these new plants.
Blade Batteries
Global Delocalization of Batterie Manufacturers: Example of Morocco
Let us quickly recall here the advantages which attract investments in new technologies within the countries of the South both from China and from Western countries or other nationalities aiming to relocate certain phases of their production.
The cost of intermediate production, the cost and local availability of raw materials, labor, the proximity of car suppliers and buyers, financial facilities and tax incentives, the flexibility of pollution laws, flexibility of work, the docility of social demands movements, and the rate of social charges and recovery of retirement pensions, health insurance as well as the level of unionization, the cost of land ownership and supply of these lands by the State, the level of logistical infrastructure, the ease of movement of capital, taxation and the rate of social charges and recovery of retirement pensions as well as the level of unionization, remittance and export profits as well as the company’s appropriation ratio. Not to mention the integration of operators and managers from the country of origin benefiting from all the financial and tax advantages recognized by the public authorities. 1/7/2024
First Batch of SHACMAN X6000 Series Products Rolled off the Assembly Line. Congratulations.
Asian Firms to build joint LFP cathode plants in Morocco
South Korea’s LG Chem Ltd
South Korea’s LG Chem Ltd (051910.KS) has entered a partnership with China’s Huayou Group’s subsidiary Youshan, project to build a joint electric vehicle (EV) battery material plant in Morocco to diversify its portfolio.
The Morocco plant, set to start production in 2026, aims to produce 50,000 tonnes of lithium-phosphate-iron (LFP) cathode materials annually, enough to be installed in 500,000 entry-class EVs, the South Korean chemical maker said in a statement.
Huayou has joined the growing number of Chinese electric vehicle and battery companies seeking to expand overseas to get closer to their foreign clients and benefit from local incentives.
In a separate statement, Huayou’s listed unit Zhejiang Huayou Cobalt Co (603799.SS) said it intended to build plants with LG Chem in Indonesia and Morocco under a strategic partnership to promote international growth.
The Morocco plant, set to start production in 2026, aims to produce 50,000 tonnes of lithium-phosphate-iron (LFP) cathode materials annually, enough to be installed in 500,000 entry-class EVs, the South Korean chemical maker said in a statement.
LG Chem, known for manufacturing more expensive nickel-cobalt-manganese (NCM) cathodes, is entering the LFP cathode business to meet the growing demand for cheaper LFP batteries as the auto industry seeks to produce more affordable EVs, whose most expensive components are the batteries.
LG Chem said LFP cathodes produced at the Morocco plant will be supplied to the North American market and could be eligible to receive subsidies from the U.S. Inflation Reduction Act (IRA) as Morocco is a free-trade partner with the United States.
CNGR, Chinese Battery-Parts Maker, and African Fund Al Mada
CNGR, the Chinese Battery-Parts Maker is partnering with the African Fund Al Mada to Plan a $2 Billion Venture in Morocco – The investment volume is about 20 billion Moroccan dirhams (1.8 billion euros). CNGR Advanced Material Co., a Chinese maker of battery components, is joining forces with the African private investment fund Al Mada to build an industrial base in Morocco {9/18/2023} for a battery materials production and recycling facility. The strategic partnership aims to produce ternary CAM precursors for lithium-ion batteries as well as lithium iron phosphate (LFP) and recycle black mass from used batteries. A joint venture has been established between the two companies to advance the project.
Battery material for more than one million EVs per year
Construction is scheduled to begin this year, and phased production is expected to start in the fourth quarter of 2024. The plan is to produce battery material for more than one million electric vehicles per year, with 120,000 tons of CAM precursors, 60,000 tons of LFP, and 30,000 tons of black mass recycling.
Negotiations with leading phosphate and fertilizer supplier
CNGR Morocco New Energy, a subsidiary of CNGR, will hold a majority 50.03 percent stake in the joint venture, while Al Mada’s subsidiary NGI will hold 49.97 percent.
The two partners are currently negotiating with the OCP Group to purchase the necessary raw materials, including phosphate products. Jorf Lasfar is located directly on the Atlantic coast, and a seaport is also available in El Jadida. So far, Jorf Lasfar is known mainly for the country’s largest coal-fired power plant. OCP Group, a leading Moroccan phosphate and fertilizer supply company, sources the highest quality phosphate salts for the production of LFP and ternary CAM precursors from the plant. Morocco is a major global producer of phosphate salts: Its reserves account for 71% of the world total. Other suppliers, such as cobalt and manganese products, are not named in the announcement.
The focus will be on producing precursors for NCM and LFP cathode materials. The plant will also include recycling facilities. The companies are planning annual capacities of 120,000 tonnes for NCM precursors, 60,000 tonnes for LFP precursors, and 30,000 tonnes for the recycling of battery materials in the first phase. The planned annual production is 70 GWh. That should be enough for more than one million electric vehicles.
Production is mainly for export to meet the high demand in Europe and America – but the partners do not name potential customers. Construction will begin this year after the necessary permits have been obtained and production is scheduled to start in 2025. Source: Info via email
“Morocco aims to open EV battery gigafactory”
Announced on July 22, 2022, at Marrakesh.
Asian Companies Building Battery Factories in Morocco to export to Europe and the U.S.
During the summer of 2022, the Moroccan Minister of Industry and Trade declared that Morocco was negotiating with electric vehicle battery manufacturers to set up a plant in the country to mesh with its existing automotive sector and cobalt output.
“We hope to sign a deal for the plant before the end of this year,” the minister said in an interview with Reuters but declined to name the companies.
He did not say how much investment it would require but referred to it as a “gigafactory,” a term widely used for very big production facilities. The planned factory for EV batteries will “offer a huge momentum for the local automotive sector” and will benefit from the availability of renewable energy and raw materials such as cobalt and phosphates in the country, he said.
Morocco is home to Renault and Stellantis production plants, with a combined production capacity of 700,000. The Dacia Sandero and Peugeot 208 are examples of popular models that are built in Morocco. Demand for such batteries is growing outside and within Morocco, where Citroen plans to double its production capacity within two years from 50,000 EVs, Mezzour said.
Exports by about 250 automakers and suppliers in Morocco have topped the country’s industrial exports over the past seven years, surpassing phosphate sales. Up to May this year, Morocco’s automotive sector sales stood at $4.13 billion, up 24 percent. To increase competitiveness in the face of competition from China and India, Morocco plans to increase the rate of locally made parts in the cars it exports to 80 percent, up from 65 percent currently, Mezzour said.
“We are targeting 1 million within the next three to four years,” Mezzour said. Source:
And what is Europe doing for its renewable industry?
US Billions are flooding into US-based investments, so even European companies are now moving to the US for their investments.
In 2022, the top five manufacturers control more than 80 percent of the battery market. With an increased interest in EVs – global sales of electric cars totaled 4.2 million units in 2021, up by 108 percent compared with 2020 – there’s been concern that a long list of car companies may soon face an EV battery shortage from electric car battery manufacturers.
The advantages which attract investments in new technologies within the countries of the South both from China and from Western countries or other nationalities aiming to relocate certain phases of their production. The cost of intermediate production, the cost and local availability of raw materials, labor, the proximity of car suppliers and buyers, financial facilities and tax incentives, the flexibility of pollution laws, flexibility of work, the docility of social demands movements, and the rate of social charges and recovery of retirement pensions, health insurance as well as the level of unionization, the cost of land ownership and supply of these lands by the State, the level of logistical infrastructure, the ease of movement of capital, taxation and the rate of social charges and recovery of retirement pensions as well as the level of unionization, remittance and export profits as well as the company’s appropriation ratio. Not to mention the integration of operators and managers from the country of origin benefiting from all the financial and tax advantages recognized by the public authorities.
1/7/2024
LG Energy Solution
A unit of LG Chem, this South Korean battery supplier is neck and neck with CATL as the world’s number one supplier of lithium-ion EV batteries.
Although there has been some controversy along the way – LG Chem successfully sued rivals SK Innovations not too long ago for stealing trade secrets – the future looks bright for the company, with LG Energy Solution beginning production of 4680 cells in 2023, the very same cells which make up Tesla’s most advanced battery pack yet.
The large format 4680 cylindrical cells are said to increase power by six times and energy by five times, as well as boost an EV’s range by up to 54 percent.
These 4680 cells are also expected to bring the price of Tesla EVs down to around $US25,000, according to Tesla founder Elon Musk.
The company also has a US$303 million plant in Holland, Michigan, capable of producing enough cells per year to build between 50,000 and 200,000 battery packs for EV and hybrid manufacturers like Ford, General Motors, Hyundai, Volvo, Renault and Chevrolet.
By 2025, all factories in South Korea, North America, Europe, and China will operate on 100 percent renewable energy.
BYD
Once written off by Elon Musk, China’s BYD has proven the haters wrong by becoming the world’s top seller of EVs in July 2022, having sold 641,000 vehicles in the first half of 2022 – nearly 80,000 more EVs than Tesla.
Although it’s gained a strong footing in the EV market, BYD began life as a rechargeable battery manufacturer in 1995, and in 2021 it built a new facility in Chongqing, China, to produce its blade batteries, which are thinner and longer than conventional lithium-ion cells.
Blade batteries are also considered to be the safest EV batteries because they are far less likely to catch fire in an accident. They are also 50 percent smaller than other battery blocks, resulting in lighter and more efficient EVs.
There seems to be no hard feelings between the Chinese behemoth and Elon Musk: BYD executive vice president Lian Yubo now says BYD is “good friends” with Mr Tesla, and has plans afoot to supply his company with EV batteries.
Panasonic
Panasonic is another of the world’s largest lithium-ion battery manufacturers, the electronics giant partnering with Tesla on Giga Nevada – or Gigafactory 1, as it’s also known – a $5 billion lithium-ion battery and electric vehicle component factory located in Storey County, Nevada, which produces a Panasonic EV battery exclusively for Tesla’s Model 3, Model S and Model X SUV.
Panasonic is said to have invested US$1.6 billion in Gigafactory 1 to make itself Tesla’s prime supplier of EV batteries, with raw materials being supplied by a mining company that extracts lithium from a site located 320km away from the factory.
Jointly designed and engineered by Tesla and Panasonic, the ‘2170’ battery has been in mass production since January 2017, with the new and improved 4680 battery cell, which has significant capacity improvements, going into production in 2023.
Turning an eye to the future, Shoichiro Watanabe, CTO of Panasonic Energy, says the company will achieve a 20 percent improvement in energy density in its battery cells by the end of the decade.
In much the same way that Tesla has partnered with other EV battery manufacturers in other international markets, Panasonic has also partnered with Toyota to build a lithium-ion battery plant in Japan that will supply batteries for Toyota EVs. Source:
Present Outlook of the World Battery Manufacturing Capacity
With the world gearing up for the electric vehicle era, battery manufacturing has become a priority for many nations, including the United States. However, having entered the race for batteries early, China is far and away in the lead.
Predominance of China’s World Manufacturing Capacity
– China controls raw materials –
Another key factor in China’s supremacy: is control over the raw materials needed to manufacture the batteries: lithium and cobalt.
According to Bloomberg, the Chinese firms Ganfeng and Tianqi control 17 and 12 percent respectively of the world production of lithium thanks to their investments in mines in Australia and South America.
Tianqi bought a 24 percent stake in Chilean miner SQM for $4.1 billion in December 2018. Together with the US firm Albemarle it also controls the huge Greenbushes mine in Australia.
Meanwhile, Chinese firms control at least half of the cobalt extracted in the Democratic Republic of Congo, where 70 percent of global output comes from, according to estimates cited by Bloomberg.
China Molybdenum bought a major site from the US firm Freeport-McMoran for $2.65 billion in 2016. China also has 80 percent of the world’s capacity to produce refined cobalt using chemical processes.
This is not a basic skill (“We are a car manufacturer, not chemically,” said Marianne Battalion, Renault E’s project manager last year), but second, whether the production was outsourced to Koreans or Chinese, many unemployed motor factories instead.
China has 6 of the top 10 EV battery makers with 60 percent market share, led by CATL and Warren Buffett-backed BYD.
Besides CATL and BYD, CALB, Gotion High-tech, Sunwoda, and Eve Energy feature among the world’s top 10 EV battery makers, according to SNE Research
CATL installed 165.7 gigawatt hours of battery cells in the first 11 months of last year, giving it a global market share of 37.1 percent
China’s well-established advantage is set to continue through 2027, with 69% of the world’s battery manufacturing capacity. With nearly 900 gigawatt-hours of manufacturing capacity or 77% of the global total, China is home to six of the world’s 10 biggest battery makers. Behind China’s battery dominance is its vertical integration across the rest of the EV supply chain, from mining the metals to producing the EVs. It’s also the largest EV market, accounting for 52% of global sales in 2021.
The U.S. is projected to increase its capacity by more than 10-fold in the next five years. EV tax credits in the Inflation Reduction Act are likely to incentivize battery manufacturing by rewarding EVs made with domestic materials. Alongside Ford and General Motors, Asian companies including Toyota, SK Innovation, and LG Energy Solution have all announced investments in U.S. battery manufacturing in recent months.
Europe will host six of the projected top 10 countries for battery production in 2027. Europe’s current and future battery plants come from a mix of domestic and foreign firms, including Germany’s Volkswagen, China’s CATL, and South Korea’s SK Innovation.
Combating China’s dominance will be expensive. According to Bloomberg, the U.S. and Europe will have to invest $87 billion and $102 billion, respectively, to meet domestic battery demand with fully local supply chains by 2030.
Within such an unbalanced world of Battery Manufacturing Capacity and given that Europe is using a mixed approach, Morocco is positioned to benefit from Europe’s reliance on domestic and foreign manufacturers of batteries.
Morocco, Regional Hub for Battery Material Plants
South Korea’s LG Chem partnering with China Huayou Group announced a project to build in Morocco a joint electric vehicle (EV) battery material plant. On the other side, CNGR, Chinese Battery-Parts Maker, and African Fund Al Mada aim to build an industrial base in Morocco for a battery materials production and recycling facility. All the Production of these facilities is intended for export to meet high demand in Europe and America.
An electric vehicle (EV) is a vehicle that uses one or more electric motors for propulsion. Photo by Said El Mansour Cherkaoui
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Reciprocity and Rationality in International Trade
Educating people about international trade, investment, and the global economy is a great way to foster understanding and collaboration across different cultures and societies. By sharing information and insights, you’re helping to bridge cultural gaps and promote a more interconnected world.
Your work is not only informative but also contributes to the larger goal of global unity and mutual understanding. It’s efforts like yours that can make a significant difference in how we perceive and interact with the world around us.
It’s concise, clear, and directly communicates the main theme of your discussion. “Rationality in International Trade Means Reciprocity in Exchanges” effectively captures the essence of the points you’ve raised about the importance of reciprocity and fairness in international trade.
This version emphasizes the goal (achieving reciprocity) and the means to that end (rationality).
The suggestion sparked some thoughts! The French expression “Bonnet Blanc – Blanc Bonnet” is often used to indicate that two things are essentially the same, despite appearing different. It’s interesting to see how this concept can be applied to the discussion of international trade and reciprocity. Just like “Bonnet Blanc – Blanc Bonnet”, different trade strategies might appear distinct but could lead to similar outcomes when the principle of reciprocity is upheld. Keep up the insightful work!
Europe does not play the Scarecrow given its continental exposition to Eastern Europe, Russia, Turkey, the Middle East, India, Vietnam, Korea, China, and Japan.
The United States has Canada, Central, and South America as Leverages and Cushions for Readjustments of the Terms and Conditions of International Trade and the Changes in the World Economy as well as the Fluctuations of the International Monetary and Financial Policies.
Rationality in International Trade Means Reciprocity in Exchanges
Rationality in international trade indeed implies reciprocity in exchanges. Countries trade with each other to leverage their comparative advantages, and this exchange is typically reciprocal. Each country exports goods and services that it can produce more efficiently and imports those that other countries can produce more efficiently.
Europe’s Position: Europe’s geographical location indeed gives it a unique advantage in terms of access to diverse markets such as Eastern Europe, Russia, Turkey, the Middle East, India, Vietnam, Korea, China, and Japan. This allows for a wide range of trade opportunities and partnerships.
The United States’ Leverages: The United States, with its proximity to Canada, Central, and South America, indeed has significant leverage. These regions not only provide a substantial market for U.S. goods and services but also a source of raw materials and labor. The U.S. can use these advantages to adjust to changes in the world economy and fluctuations in international monetary and financial policies.
However, it’s important to note that while geographical proximity provides certain advantages, the dynamics of international trade are also significantly influenced by other factors such as trade policies, economic stability, technological advancements, and diplomatic relations among others.
In conclusion, both Europe and the United States, given their unique positions and advantages, play crucial roles in the global trade ecosystem. Their strategies and policies can have far-reaching impacts on the global economy.
As such, these regions need to promote fair trade practices, uphold ethical standards, and work towards sustainable economic development.
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Achieving reciprocity in international trade requires cooperation and negotiation between countries. It’s a complex process that involves balancing the interests of different stakeholders, including businesses, consumers, and governments. Despite these challenges, reciprocity remains a key principle of fair and equitable trade.
The Role of Rationality in International Trade can be challenging due to several factors:
Achieving reciprocity in international trade requires cooperation and negotiation, balancing the interests of different stakeholders, and establishing modules for mutual benefits and win-win exchanges. The economic disparity between countries can also pose a challenge. Developed countries often have more resources and advanced technologies, which can give them an advantage in trade. On the other hand, developing countries may lack the necessary infrastructure and resources to compete on an equal footing. Political relations between countries can significantly impact trade. For instance, political tensions or conflicts can disrupt trade relations and make reciprocity difficult to achieve.
Many countries tend to use Non-tariff Barriers to protect their market, products, and consumers. These include product standards, safety regulations, and bureaucratic hurdles, which can be used to restrict imports and protect domestic industries.
The other potential hurdle can be the currency exchange rates. The constant fluctuations in currency exchange rates can affect the balance of trade. A strong currency can make a country’s exports more expensive and imports cheaper, potentially leading to a trade deficit. Different countries have different trade policies and regulations, which can make it difficult to achieve a balance in trade. Some countries may have protectionist policies that favor domestic industries, while others may have liberal trade policies that encourage imports.
Achieving Reciprocity: Role of Rationality in International Trade
Fairly negotiated Free Trade Agreements (FTAs) and well-structured tariffs can indeed alleviate many of the challenges associated with international trade. According to the complementary perspective of the Fair Trade concepts and the doctrine of liberalism, countries with advanced technology can produce goods more efficiently and at a lower cost, giving them a competitive advantage in international trade and they can trade that for products with low-tech contributing in the integration of the global market that will build on specialization.
FTAs often include the reduction or elimination of tariffs and non-tariff barriers, which can make it easier for businesses to export goods and services to foreign markets. By setting clear trade rules, FTAs can help to ensure that domestic businesses can compete fairly with foreign companies.
By opening up new markets for businesses, FTAs can stimulate economic growth and create jobs. FTAs can lead to a greater variety of goods and services being available to consumers, often at lower prices.
Achieving Reciprocity: Role of Rationality in International Trade
As for the “administrative barriers” mentioned, these can indeed be a significant hurdle in international trade. These barriers, which can include things like customs procedures, product standards, and licensing requirements, can be particularly challenging for small and medium-sized enterprises (SMEs) that may lack the resources to navigate these complexities.
It’s important to note that while FTAs and negotiated tariffs can help to alleviate some of these challenges, they are not a panacea. Achieving true reciprocity in international trade requires ongoing dialogue, cooperation, and negotiation between countries. It’s a complex process that involves balancing the interests of different stakeholders, including businesses, consumers, and governments.
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Collage made by Said El Mansour Cherkaoui tracing the USA-China relation since the Presidency of Donald Trump that we consider as the opening of a New Chapter that we are still reading up to now
Said El Mansour Cherkaoui Ph.D. ★ Strategic Catalyst Driving U.S.-Morocco-Africa Investment, Trade, and Business Development ★ Senior Policy Adviser in International Affairs ★ Accomplished Public Speaker ★ Distinguished News Executive Editor ★ The recent decline in the United States’ standing in the Arab world and China’s growing influence indeed has significant implications. Let’s break down … Continue reading
It’s about to be “Trade War Summer” in Europe!
The EU is expected to slap tariffs on Chinese-made electric vehicles this week, citing a months-long investigation into Beijing’s subsidies for EV manufacturers.
The move comes amid wider EU-China trade tensions over green technologies like EVs, solar panels, and batteries, where China has become a major low-cost producer whose exports often undercut those of Western competitors.
The EU says China is unfairly subsidizing producers and “dumping” goods in Europe that it can’t sell at home because of weak consumer demand.
China says it’s being unfairly punished for being too good at producing precisely the products the West claims it wants to meet its climate goals.
Experts doubt the tariffs will be big enough to dent sales. Chinese EVs are relatively cheap in the EU, starting at around $32,000.
But China could retaliate against EU industries. Chinese media say local firms want Beijing to consider EU subsidies for European brandy, dairy products, and pork.
If the Europeans try to unplug Chinese EVs, expect Beijing to clap back fast with tariffs of its own on those industries, upping the ante in a trade dispute between the world’s largest exporter (China) and the world’s largest advanced consumer market (the EU).
C’est sur le point d’être « l’été de la guerre commerciale » en Europe !
L’UE devrait imposer cette semaine des droits de douane sur les véhicules électriques fabriqués en Chine, citant une enquête de plusieurs mois sur les subventions accordées par Pékin aux fabricants de véhicules électriques.
Cette décision intervient dans un contexte de tensions commerciales plus larges entre l’UE et la Chine sur les technologies vertes comme les véhicules électriques, les panneaux solaires et les batteries, où la Chine est devenue un important producteur à bas prix dont les exportations sont souvent inférieures à celles de ses concurrents occidentaux.
L’UE affirme que la Chine subventionne injustement les producteurs et « dumping » en Europe des produits qu’elle ne peut pas vendre chez elle en raison de la faible demande des consommateurs.
La Chine affirme qu’elle est injustement punie pour avoir trop bien réussi à produire précisément les produits que l’Occident prétend vouloir pour atteindre ses objectifs climatiques.
Les experts doutent que les droits de douane soient suffisamment élevés pour nuire aux ventes. Les véhicules électriques chinois sont relativement bon marché dans l’UE, à partir d’environ 32 000 dollars.
Mais la Chine pourrait riposter contre les industries européennes. Les médias chinois affirment que les entreprises locales souhaitent que Pékin envisage des subventions européennes pour le brandy, les produits laitiers et le porc européens.
Si les Européens tentent de débrancher les véhicules électriques chinois, on s’attend à ce que Pékin réagisse rapidement en imposant ses propres droits de douane sur ces industries, faisant monter la barre dans un conflit commercial entre le plus grand exportateur mondial (la Chine) et le plus grand marché de consommation avancé au monde (l’UE). .
Updated 06/13/2024
The implications of China’s exports to Russia and their overall trends have significant ramifications for the world economy and geopolitical relations. Let’s explore key points:
China-Russia Trade Trends:
China’s exports to Russia have surged, with a 41.5% increase in January and February 2024 compared to the same period last year 1. Key export products include machinery, nuclear reactors, vehicles, electronics, and electrical equipment 2.
Economic Impact:
Western sanctions on Russia have led Moscow to pivot toward China for economic support. China relies on Russian crude oil and coal for manufacturing and energy security. Settlements for trade have been delayed due to Chinese banks treading carefully amid sanctions 3.
Les implications des exportations chinoises vers la Russie et leurs tendances générales ont des conséquences importantes sur l’économie mondiale et les relations géopolitiques. Explorons les points clés :
Tendances commerciales sino-russes : Les exportations chinoises vers la Russie ont bondi, avec une augmentation de 41,5 % en janvier et février 2024 par rapport à la même période de l’année dernière 1. Les principaux produits d’exportation comprennent les machines, les réacteurs nucléaires, les véhicules, l’électronique et les équipements électriques2.
Impact economique: Les sanctions occidentales contre la Russie ont conduit Moscou à se tourner vers la Chine pour obtenir un soutien économique. La Chine dépend du pétrole brut et du charbon russes pour sa production manufacturière et sa sécurité énergétique. Les règlements commerciaux ont été retardés en raison de la prudence des banques chinoises face aux sanctions3.
Geopolitical Implications:
China and Russia are not formal allies but have strengthened ties to challenge U.S. hegemony. Western democracies’ re-engagement with China while maintaining tough stances reflects a delicate balancing act 4. The U.S. and EU closely monitor China’s sustained Russian trade, which could impact their relations 3.
Western Economies’ Reaction:
Western policymakers face challenges in responding to China’s growing role in Russia’s defense industry. Enacting comparable sanctions on China would be disruptive to the global economy 5. The U.S. Treasury has issued stern warnings to China over supporting Russia’s war machinery 6.
China’s trade with Russia amid sanctions has complex implications, affecting global dynamics and requiring careful diplomatic maneuvering by Western economies. 241356
Implications géopolitiques : La Chine et la Russie ne sont pas des alliées formelles mais ont renforcé leurs liens pour défier l’hégémonie américaine. Le réengagement des démocraties occidentales envers la Chine, tout en maintenant des positions fermes, reflète un délicat exercice d’équilibre 4. Les États-Unis et l’UE surveillent de près le commerce soutenu de la Chine avec la Russie, ce qui pourrait avoir un impact sur leurs relations 3.
Réaction des économies occidentales : Les décideurs politiques occidentaux sont confrontés à des difficultés pour répondre au rôle croissant de la Chine dans l’industrie de défense russe. L’imposition de sanctions comparables à la Chine perturberait l’économie mondiale 5. Le Trésor américain a lancé de sévères avertissements à la Chine concernant son soutien à la machine de guerre russe 6.Le commerce de la Chine avec la Russie dans un contexte de sanctions a des implications complexes, affectant la dynamique mondiale et nécessitant des manœuvres diplomatiques prudentes de la part des économies occidentales. 2 4 1 3 5 6
Russian state media reported Monday that President Vladimir Putin will travel to North Korea and Vietnam in the coming weeks as Moscow tries to build influence among middle powers in Asia.
This will be Putin’s first trip to Pyongyang in 24 years, and he’ll find the city much changed. In 2000, the massive unfinished Ryugyong Hotel loomed skeletally over Stalinist-era apartment blocks, in an almost-too-on-the-nose metaphor for the country’s paranoid and feeble state two years after the 1994-1998 mass famine. Putin was in town to officially reestablish relations with North Korea, which had ruptured following the collapse of the Soviet Union.
Today, the DPRK’s economy can now support a level of prosperity in Pyongyang — including cladding for that still-empty hotel, and some high-rises nearby to soften the landscape. It also now has nuclear weapons to protect itself from the US and artillery shells Russia needs in Ukraine, meaning Putin has to show up with something a little more high-tech in hand.
He’s previously pledged to help North Korea put spy satellites in orbit, which it accomplished for the first time last year. But a subsequent launch this May, which South Korean intelligence believes was aided by Russian technicians, exploded shortly after takeoff. Nonetheless, North Korean leader Kim Jong Un says he wants to launch three more spy satellites this year, and we have our eye out for any indication of where the cooperation might go from here.
The Vietnam leg is less juicy by comparison. Hanoi and Moscow have a tight military relationship stretching back to the early Cold War, but Vietnam has recently been courting better relations with the US to offset threats from China. We’re expecting a carefully choreographed visit with little that could rock the boat.
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