Summary
– America is facing a situation similar to the OPEC Oil Crisis in 1972, where high oil prices made large American cars expensive and inconvenient
– Japanese automakers thrived during the crisis by building cheap, reliable, fuel-efficient cars that American car companies couldn’t produce
– American car companies shifted their focus to selling high-margin SUVs and pickups to the top 20% income earners, while the majority bought used cars
– Biden’s 100% tariffs on cheap Chinese EVs are viewed as a destructive choice that favors unions and perpetuates Sinophobia and xenophobia
– America’s history of facing economic challenges, adapting to foreign competition, and struggles with income inequality play a role in the current debate on EV tariffs.
Article
In the 1970s, America faced an energy crisis similar to the current situation, leading to expensive and inconvenient land yachts. Japanese automakers like Toyota, Nissan, and Honda entered the market with cheap, reliable, and fuel-efficient cars, while American car companies struggled to compete. Japanese automakers opened manufacturing plants in the US, catering to the middle and lower-income brackets who could not afford American land yachts. This shift highlighted America’s unique dependency on cars compared to other countries.
During this time, American car companies continued to sell to their profitable customers, the top 40% income earners, while the middle and lower brackets turned to Japanese cars. As the gap between rich and poor widened in America, Reagan negotiated trade restrictions with Japan to protect American automakers. The fear of Japanese competition and the decline of the US auto industry raised concerns about economic competition and the need for corrective actions.
Fast forward to today, where China’s rise in the auto industry is sparking similar fears and protectionist measures. The US government, under Biden, has imposed 100% tariffs on cheap Chinese EVs, aligning with union interests and institutional Sinophobia. The narrative of China as a threatening Communist enemy, coupled with xenophobia and racism, creates a hostile environment towards Chinese automakers. Despite China’s advancements in technology and manufacturing, the US struggles to accept their competition and potential superiority in the market.
The economic shift in the US, driven by Reaganomics and the decline of the middle class, has led to a market where the top 20% can afford new cars frequently, leaving the rest to rely on increasingly older used vehicles. The disparity in buying power and the focus on high-margin SUVs and pickups by American car companies further widens the gap. The reluctance to embrace cheap Chinese EVs that could benefit the majority of Americans is reflective of deeper systemic issues and historical biases against perceived external threats.
As the world transitions towards decarbonization and EV adoption, the US’s protectionist stance towards Chinese EVs hinders progress and innovation. While Japan was once embraced as a manufacturing partner after its defeat in WWII, China’s perceived strength and scale create more resistance. Biden’s decision to impose tariffs reflects a broader reluctance to acknowledge and adapt to changing global economic dynamics. The narrative of China as a competitor rather than a potential collaborator reinforces a narrow-minded approach to economic and environmental challenges.
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