Tariffs are back big style – and the main threat is still China.
The 21st century is Chinese. When President Bill Clinton brought them into the World Trade Organisation (which they officially joined in September 2001, just two-weeks after 9/11), China went from having a dull, stagnant economy to emerging as a world leader.
From the U.S. to the EU, Western manufactures flooded into China for its cheap labour. With them they brought the high-tech and heavy industry technology China never had. Now, a quarter-century later, China has all that they need not only to compete with Western manufactures...but they can excel beyond them.
Now someone other than Donald Trump has a trade beef with China. Russian officials have put a fee equivalent to about $7,500 on Chinese passenger vehicles coming into the country.
After Russia attacked Ukraine, Western countries banned exports of cars to the country and China picked up the slack. It was good for Russia—consumers could still buy cars—and a boon for China, which has sought to replace torpid consumer spending with expanded revenue from exports.
However, for Russia it became too much of a good thing: China is now sending seven times as many cars into Russia as it did in 2022 and claiming 63% of the market, compared to 29% for Russia’s domestic makers.
Cui Dongshu, head of the China Passenger Car Association, said in comments quoted by the Financial Times that in Russia;
International brands have been completely replaced by Chinese cars...If the Russian-Ukrainian crisis ends, pressure on Chinese carmakers will increase dramatically to reduce their presence in Russia’s vehicle sector.
In January, Russian regulators more than doubled “recycling fees,” the country’s equivalent of tariffs, to more than twice what they were last September, hiking them to about $7,500 per car and mandating the level be raised 10 to 20% annually through 2029.
Like other countries, Russia was being swamped by an influx of cheap Chinese goods inundating domestic manufacturing.
Gregor Sebastian, auto analyst at the Rhodium Group consulting firm, told the FT;
They want to step up local production...For a while, [Russians] felt like they had no other choice but now they’re recognizing they have bargaining power.
As other countries have begun taxing or limiting Chinese vehicle imports, Russia has become an important market for Chinese carmakers.
In addition Russia also provided a dumping ground for the gas and diesel vehicles that second-hand cars dealers have been unable to sell at home amid China’s swift conversion to electric mobility. In 2024, a whopping 97% of cars sent to Russia by China were petro-powered, the number of used cars shipped has soared 612%.
China is now a different country to 25 years ago. It has the best universities in the world (9 out of 10 – the other being Harvard) and high graduate levels. A country of nearly 2 billion highly educated, skilled workers is enough to give other countries pause for thought. China has gone to great lengths to electrify and is now a world leader in EVs. Most of the new patents in the world are being filed by Chinese universities or corporations.
As China continues to outpace other countries I see more tariffs coming down the road for the country. A victim of their own success, but then that’s why they are so keen to develop their own middle class, consumerist base. That and flying driverless cars.
