We now have a projected start date for when tougher tariffs on Chinese imports—including computer chips, medical products and, yes, electric vehicles—are set to go into effect: August 1. But China certainly isn't taking this lying down, and some automakers based here in the U.S. could face the worst retaliatory penalties. 

Welcome back to Critical Materials, our roundup of what matters most in the EV transition, tech, transportation and more. Today we're also hearing from Stellantis' CEO about the tariffs, and we'll look at how Ford is changing once-strict EV rules for its dealers. 

30%: The Tariff Showdown With China Gets A Kickoff Date

Biden imposes a 100% tariff on Chinese EVs.

In case you've been living under a rock these past few weeks, the U.S. is set to quadruple tariffs on Chinese-made EVs and raise them on Chinese-sourced batteries and materials soon. The White House says the move is meant to counter a potential flood of "cheap" EVs into our market since China's auto sector is so oversaturated right now; those cars coming here could decimate our auto industry, since they'd potentially price out any local competitors. 

As we've written here before, the best-case scenario is that this move gives the Western automakers time to catch up on batteries and EV production, because China is far ahead on both. But no one seriously thinks tariffs will keep Chinese EVs out of our market forever. 

Automotive News reports that trade representatives are seeking public and corporate comments on the tariffs, which will close on June 28. That story also notes that tariffs on Chinese EVs, while headline-grabbing, "may have more political than practical impact in the U.S., which imports very few Chinese EVs."

But it's potentially bad news for BMW and Mercedes-Benz, which produce a significant amount of gas-powered SUVs in North America that get exported to China and will likely face harsher tariffs of their own: 

The automakers most impacted would be Toyota, Mercedes-Benz, and BMW, said Daniel Kollar, head of consultancy Intralink’s automotive and mobility practice.

Japanese cars such as Toyota’s Lexus brand would only be affected if China imposed tariffs on imports from all nations, instead of targeting shipments from the U.S. or EU.

In addition to the jab at the car trade, China has recently hinted it could impose tit-for-tat levies on European wine and dairy products and begun an investigation into European exports of brandy.

Trade tensions between the EU and China have soared since the EV probe was announced, with President Xi Jinping’s visit to Europe this month seemingly doing little to relieve the strain. Xi was seeking to dissuade the bloc from going down the same path as the U.S., which has unveiled a sweeping set of charges on imports from China—raising concerns in Beijing that American allies may follow suit.

Meanwhile, it's still unknown how the new tariffs will affect the prices of the few Chinese-made EVs that are sold here or will be, such as the Polestar 2 and the upcoming Volvo EX30

Settle in for what's shaping up to be a long trade war between East and West, folks. 

60%: Tariffs Are A 'Trap,' Says Stellantis CEO

Chrysler Airflow Concept at 2021 Stellantis Software Day

The trifles of nations are of little concern to Stellantis CEO Carlos Tavares, who simply wants to make as much money as possible for his family of car brands. Tavares has warned of "significant consequences for jobs and production" in Europe and beyond this week, according to Reuters

Tavares said tariffs on Chinese vehicles imported to Europe and the United States are "a major trap for the countries that go on that path" and will not allow Western automakers to avoid restructuring to meet the challenge from lower cost Chinese manufacturers.

"When you fight against the competition to absorb 30% of cost competitiveness edge in favour of the Chinese, there are social consequences. But the governments, the governments of Europe, they don't want to face that reality right now," Tavares said.

Tavares said that tariffs would only fuel inflation in the regions where they are imposed, potentially impacting sales and production.

"We are not talking about a Darwinian period, we are in it," Tavares said at a Reuters Events Automotive Europe conference in Munich, adding the price battle with Asian rivals would be "very tough."

"This is not going to be easy for the dealers. It's not going to be easy for the suppliers. It's not going to be easy for the OEMs. As we know in Europe, everybody is talking about change as long as change is for somebody else."

Emphasis mine right there, because I love that phrasing; he's exactly right. But he also has a vested interest in a trade war not escalating. Stellantis is undertaking a joint venture with Chinese EV maker Leapmotor, the first of its kind designed to sell China's EVs outside of that country instead of within it. 

Basically, Stellantis at this point—which ranges from Fiat to Jeep, Ferrari, Peugeot, Opel and beyond, plus this new Leapmotor deal—is so globalized that international fighting does its profits little good. Can't we all just get along?

90%: Ford Backs Off On Tough Dealer EV Requirements

Ford Builds 150,000th Mustang Mach-E - November 30, 2022

A few years back, Ford CEO Jim Farley laid down the law to his dealers: invest in EV charging, education and no-haggle prices if you want to stay in the game. And many dealers have had a swift and decisive response: no. 

So now, Ford is tweaking its requirements for EV sales after meeting with dealer groups nationwide, and in the meantime, it's telling them to hold off on financial commitments related to charging and other investments, Automotive News reports:

Among the many topics discussed in 11 meetings with roughly 1,000 dealers across six cities was the "rapidly changing EV market," Frick said. Since Ford first asked dealers to invest heavily to sell EVs, it has delayed spending, postponed products and refocused itself on smaller, more affordable models. Despite rising sales, the company expects to lose up to $5.5 billion on its EV business unit this year.

[Andrew Frick, president of Ford Blue] declined to discuss specific alterations to the program but said executives and the dealer council were on the same page after the meetings. "I think we're both pretty aligned on the process based on what we heard," he said. "I expect to see some changes coming out of it."

Beyond the EV program, Ford expects to finalize immediate, near-term and long-term changes to other aspects of the business in response to concerns the automaker heard from dealers, Frick said.

[...] Ford is working to improve dealer communications amid falling trust levels and concerns over EVs, warranty costs and other topics. Frick said 93 percent of dealers who attended the meetings left with higher confidence in the brand, according to an internal survey.

I'll translate all of this for you. The dealers, by and large, don't want to sell or have anything to do with EVs, because it represents something new that they have to learn about and build out—and could threaten their lucrative parts and repair revenue. For now, they seem to have won, being among the leading voices begging Ford to slow its EV commitments. 

At least they have tariffs to protect them... for now, anyway. 

100%: Where Do The Tariff Wars End Up?

Zeekr NYC

Let's hop in our time machine—it's a Tesla Cybertruck here, because the stainless steel construction helps with the flux dispersal—and jump ahead to August of 2030. Where did these tariffs put us, China and the rest of the world? How does it all shake out, in your mind?

I think this could just spur a repeat of the 1980s, where the Chinese automakers will find ways to build cars with factories in the U.S. Technically, Geely-owned Volvo is already doing exactly that. Meanwhile, I do think the tariffs will give the U.S. automakers cover to just slow-walk EV development, much to their own detriment long-term. What do you think?

Contact the author: patrick.george@insideevs.com

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