https://insideevs.com/news/756372/china-eu-minimum-ev-price-deal-us-tariffs/
China is dominating the EV race, and if its ties with the European Union deepen, the U.S. could be left in the dust.
China and Europe are opening talks to deepen their trade ties. Chinese EV makers stand to benefit the most from that. Instead of the steep tariffs the EU slapped on Chinese EV imports last year, the two trading partners are now looking to establish minimum prices for Chinese-made EVs.
…and soto voce considering further cooperative moves to displace Russia as a significant Eurasian power, while looking for opportunities to not only counter but take advantage of the lunacy erupting in the new world?
I’m sure there is something I’m not understanding here. With tariffs, the government gets a bite. With minimum prices, the car company gets a bigger profit margin. Why would that be a good thing to do for the EU?
George Bush senior did that with the Japanese automakers. Made them rich, protected the big three in the U.S.
I think it is genuflecting to free trade. I think Reagan talked about free trade, Bush talked about fair trade. I could be wrong, that was in a different century.
Cheers
Qazulight(I wonder how 65 year old in 1925 felt about the late 1800’s that the grew up in. Sometime when I talk about high school I say “But it was the aeventies”)
It depends on the price, in theory. Minimum price floors get the exporter extra profit margin, it’s true. But they also operate as a sort of quota, which is bad for the exporting country and firms. So if you get the price right, you might be able to find an acceptable deal space that works for both parties.
If you set the floor high enough (and especially if you segment the market), you can end up forcing the exporting country to overprice their cars. This means they make more per car they sell - but it also means that they will sell fewer of those cars. So, for example, if a car “should” sell for $35K, but you prohibit them from selling it for less than $40K, they will earn $5K more in profits…but they won’t sell nearly as many cars, because not as many customers would want to pay $40K for the $35K car.
There’s lots of real-world reasons why this is difficult to implement - but in theory, you can come up with a way to have some protectionism without imposing as much of the burden on the exporting country. Which makes it easier to strike a deal on the arrangement.
Yes, higher prices higher VAT income.
The Captain