Beijing/Washington/New Delhi/Brussels: In response to President Donald Trump’s announcement of a 25% tariff on all foreign-made vehicles set to take effect on April 3, and on auto components (to take effect on May 3, 2025), China today asserted that no nation can achieve prosperity through the imposition of tariffs.
The Chinese government contends that these tariffs violate World Trade Organization (WTO) regulations, disrupt the established multilateral trading framework, and ultimately harm global interests while failing to resolve the underlying issues facing the United States.
Guo Jiakun, a spokesperson for the Chinese Foreign Ministry, addressed reporters in Beijing, highlighting that major trading partners of the US have already expressed their concerns. He emphasized that trade disputes and tariff wars yield no benefits for any party involved.
In 2023, China’s passenger car exports to the United States reached about $2.55 billion, marking a notable increase and underscoring the rising presence of Chinese vehicles in the US market. By the first ten months of 2024, exports soared to a record $2.9 billion, exceeding the total for the entire previous year. However, Chinese cars still represent a small share of the overall U.S. automobile import market, partly due to high tariffs; since 2018, a 27.5% tariff has been applied to most electric vehicle (EV) imports from China. Despite this, the value of US EV imports from China has surged from $7.2 million in 2018 to $388.8 million in 2023, accounting for 2% of total U.S. EV imports. These trends indicate the increasing significance of Chinese automobiles, especially electric vehicles, in the US market, despite existing trade barriers.
It may be noted that on March 26, 2025, Trump introduced and defended the 25% tariff on automobile imports and certain components, asserting that it would generate approximately $100 billion in tax revenue. He referenced a 2024 economic analysis suggesting that a global tariff of 10% could potentially boost the economy by $728 billion, create 2.8 million jobs, and increase real household incomes by 5.7%. This announcement was met with enthusiasm from the United Auto Workers (UAW), one of the largest labor unions in the US, which hailed the tariffs as a significant victory for autoworkers. The UAW expressed gratitude for the Trump administration’s efforts to tackle what it described as a “free trade disaster” that has negatively impacted working-class communities for years, labeling the tariffs as a “major step” forward for autoworkers and blue-collar workers across the nation. The union urged automakers, including the Big Three and Volkswagen, to focus on bringing good union jobs back to the US.
However, leading American car manufacturers such as Ford, General Motors, and Tesla have raised concerns that these tariffs could result in higher vehicle prices, reduced sales, and a decline in global competitiveness. Automakers relying on global supply chains could encounter delays in production and experience financial pressure due to disruptions.
Undoubtedly, the introduction of tariffs on imported vehicles by the US marks a significant change in trade policy, which could have far-reaching effects on the global automotive sector.
The worldwide ramifications of the decision became apparent almost instantly. Canada’s Prime Minister Mark Carney described the tariffs as a “direct attack” and alluded to the possibility of retaliatory actions. The French automotive association, PFA, cautioned that the tariffs could lead to significant disruptions for car manufacturers and their suppliers.
European leaders are united in their opposition to the tariffs, expressing worries about potential economic harm and the risk of escalating trade tensions. EU Commission President Ursula von der Leyen condemned the decision, labeling it detrimental to both businesses and consumers. Germany’s Economy Minister Robert Habeck called for a robust EU response to defend the European automotive industry, while France’s Finance Minister Eric Lombard proposed that the EU might consider implementing countermeasures, such as its own retaliatory tariffs.
At present, the European Union is assessing possible strategies to protect its economic interests, and is contemplating countermeasures, leading to worries about a lengthy trade conflict. Industry executives and government officials are keeping a close eye on the evolving situation.
India pursues trade negotiations with the USA
So far as India is concerned, recognising the potential impact on its $66 billion export market to the US, New Delhi is actively pursuing trade negotiations to mitigate these challenges.
Indian Minister of Commerce and Industry Piyush Goyal has indicated that discussions with the U.S. are “progressing well,” aiming to forge a mutually advantageous bilateral trade agreement. These negotiations involve contributions from various sectors, including agriculture, engineering, and textiles.
In light of these talks, India is considering reducing tariffs on over half of its imports from the US, valued at $23 billion. This approach seeks to protect Indian exports from the impending US tariffs, with the proposed reductions covering a range of goods, contingent on the U.S. providing similar concessions.
Furthermore, to bolster domestic manufacturing and enhance export competitiveness, India has removed import duties on several essential items for producing electric vehicle (EV) batteries and mobile phones. This exemption applies to 35 items related to EV batteries and 28 items pertinent to mobile phone production.
These measures highlight India striving to safeguard its economic interests and maintain and strengthen its trade relationship with the United States.
Finally, although tariffs may offer temporary support to American automakers, they have the potential to trigger inflation, escalate global trade conflicts, and cause long-lasting economic disturbances. They likely drive up prices for consumers, even for cars produced in the U.S., as local manufacturers would experience diminished pressure to keep their prices competitive.
However, the overall impact will largely hinge on the responses of trading partners and the ability of domestic manufacturers to adequately satisfy market demand.
– global bihari bureau
