What makes a car ‘made in China’ (therefore over 100% tariffs) vs ‘assembled in the USA’ (therefore no tariffs)?
The battery, engine and everything else is absolutely Chinese made. I don’t know how much assembly there is honestly but i feel the Geely, err i mean Polestar was a little close to that line.
I will say the laws around this indicate just how ridiculous tariffs can be. There’s always some line to press up against and honestly if electric motors, batteries, car bodies and wheels from china have different tariffs to a car as a whole it’s always going to lead to china shipping those parts in an easy to bolt together way to ‘make a car’.
I think my favorite part would be where they were unbolting entire seats and feeding them directly into industrial shredders.
"Ford imported all of its first-generation Ford Transit Connect models as "passenger vehicles" by including rear windows, rear seats, and rear seat belts.[1] The vehicles were exported from Turkey on ships owned by Wallenius Wilhelmsen Logistics (WWL), arrived in Baltimore, and were converted back into light trucks at WWL's Vehicle Services Americas, Inc. facility by replacing rear windows with metal panels and removing the rear seats and seat belts.[1] The removed parts were not shipped back to Turkey for reuse, but shredded and recycled in Ohio.[1] The process exploited the loophole in the customs definition of a light truck; as cargo does not need seats with seat belts or rear windows, presence of those items automatically qualified the vehicle as a "passenger vehicle" and exempted the vehicle from "light truck" status. The process cost Ford hundreds of dollars per van, but saved thousands in taxes.[1]"
the justification given for the ban (provided in other sources) is that Polestar's software stack is made in China. The theoretical spooky thing is China forcing some "evil" software update that stops all the Polestars.
The Volvo distinction is ... I mean maybe the Volvo software stack is in Europe or the US. Maybe it's also in China!
I do not really subscribe to this philosophy but what's going on isn't a "Polestar would be tar riffed" thing. It's an outright "you can't sell em" thing
There's a whole industry around reverse engineering tariff classifications to find ways to minimize all-in manufacturing cost.
For example, let's say you sell air purifiers.
Option 1 is to import an air purifier and pay the 25% tariff (or whatever the actual duty rate is) on air purifiers.
Option 2 is to import a widget that gets classified as a fan (with 5% duty) and import a widget that gets classified as an air filter (with 10% duty), then put them in the same box somewhere in the US.
Both are sold to consumers as an air purifier. But one of the options minimizes total cost to the manufacturer.
Radiolab[0] had a story about this involving "toys" vs "dolls".
"Dolls," which represent human beings, are taxed at almost twice the rate of "toys," which represent something not human - such as robots, monsters, or demons. As soon as they read that, Sherry and Indie saw dollar signs. it just so happened that one of their clients, Marvel Comics, was importing its action figures as dolls. And one set of action figures really piqued Sherry and Indie's interest: The XMEN, normal humans who, at around puberty, start to change in ways that give them strange powers.
So Sherry and Indie went down to the customs office with a bag of XMEN action figures to convince the US government that these mutants are NOT human. That argument eventually became a court case that went on for years.
> The solution is to tax the capital account instead (tobin tax)
Isn't that just going to further advantage multinational corporations that don't have to move currency in order to move resources because they're all within the same corporation?
The policy of the United States is currently a roulette wheel suffering from dementia that believes that Siri is a Norwegian supermodel they can use to seed the future Herrenrasse.
I would be more terrified if they didn’t spare a manufacturer who designs and makes cars in Sweden and the US since decades just because the majority owner is Chinese.
Polestar, the electric vehicle company backed by Volvo of Sweden and Leonardo DiCaprio was valued at $20 billion in a SPAC deal that will take it public.
the main point to me here is that such decisions should be fully public including all the input info and all the reasoning that is behind the decision, similar to a court case. Instead we have that guessing game.
Terrify me? Really? There are other, genuinely terrifying things happening right now: climate change, human rights violations, animal rights, the spread of totalitarianism… that’s terrifying.
The spread of totalitarianism as, perhaps, exemplified by the US government arbitrarily deciding that certain cars can't be sold in the US, even if they're manufactured in the US and meet all applicable regulations?
I think it's half this and half that Volvo is still a recognizable brand that Americans grew up with. My mother had a Volvo when I was seven. People would react if Volvo was banned. Polestar? What's that?
But Geely can throw down the gauntlet by building Polestars and relabeling them Volvos.
This is probably the reason. Volvo brand is well established in the USA while Polestar is new. So not very Americans would complain if Polestar is banned as compared to Volvo.
It would be better if the AI censorship was lawless, rather than authorized by the Arms Export Control Act of 1976, since that would allow the Article III branch of the federal government to be a defense against it. The lawfulness makes it worse.
Some people have been pointing out for decades that granting unchecked discretionary powers to the executive branch is a hazard. Now there is an executive using them to do things a lot of people don't like.
Are the people who don't like it going to withdraw those powers the next time they have the opportunity? The main alternative is more of this.
Granted, it seems inconsistent to treat Volvo different from Polestar. It might be just, that Volvo will get the Axe in a separate process, it might be sheer incompetence of the US admin, or it might be a deliberate negotiation tactic.
But what annoys me the most about the article is this constant praise of „China Speed“, Cost-Advantages and Love of the Free Market, as if not every single Chinese Automaker, including its Suppliers down to the tiniest screw is a State owned entity, massively subsidized and in general part of a rigged market.
This is not to take from the accomplishments of the Chinese, but a major part of the last 30+ years of development is just massive screwing and exploiting the western open market and its companies. Yeah, we’ve not forgotten the droves of people blatantly stealing IP on every trade show imaginable and a state completely absent from enforcing IP when ever another Chinese car is dropped to the market that looks 100% like a Benz, Porsche or Land Rover.
>Polestar is done in the U.S. market. Its sister brand Volvo, owned by the same Chinese parent company, was spared. No one has explained why. The U.S. Federal Government is meddling with the automotive industry, the free market, and capitalism.
I'm not saying "trust the government", not at all. But meddling in China trade is absolutely not meddling with the free market.
"Free market" implies regulators aren't picking winners and losers etc. If China subsidizes their export industry to make manufacturing in other countries uncompetitive then it's already not a free market.
Ideally what you would want is to get China to stop doing that, but now propose a mechanism to get them to.
It’s because the Polestar cars have a lot more electronic surveillance than the Volvo models, which have had only minor tweaks and have mostly not been updated for years.
If it were just about electronic surveillance, a bunch of other cars/manufacturers would be getting impeded or at least get some sort of negative scrutiny.
Correction: it is because a major Republican donor wants Chinese cars banned, because they beat the living shit out of his offerings on quality and value.
It is silly to credulously pretend that the excuse about Chinese software has even a whiff of legitimacy.
They need to balance between the Silicon Valley oligarchs desires and the MAGA voters possible reactions. Banning Volvo would probably not be well received by MAGA, at least Trump would need a bit more time to build the case that these vehicles are now unreliable.
I think a national security argument is much more sound than an economic one, although costs are externalized in a way that isn't obvious, i.e. ecological disaster that shipping everything around the world and back (components, assemblies) is, and hollowing out a local supply chain takes virtually no time while the impact or limits of it are hidden until abrupt breakage (i.e. covid-era shortages on basic supplies, wars, or heavy handed statesmen dictating preferential access to silicon or whatever today). That is, every nation has to maintain some stake in not hollowing out completely while still participating in global commerce.
> Economic efficiency would mean only a few vendors.
This is a massive lie monopolists tell you to justify anti-competitive mergers.
Increasing entity size has economies of scale (amortizing fixed costs over more units) and diseconomies of scale (bureaucratic overhead, long-distance transportation costs, etc.)
Economies of scale peter out with increasing entity size. Amortizing a $1000 fixed cost over 100 units instead of 10 saves $90/unit. Amortizing the same $1000 fixed cost over a trillion units instead of a million saves less than one tenth of one cent per unit.
Diseconomies of scale metastasize with increasing entity size. Entity size exceeds Dunbar number, language barriers and timezone asynchrony, corporate politics, independent jurisdictions imposing mutually-incompatible legal requirements, insufficient competition compromises incentives for efficiency as long-term incumbents succumb to Iron Law of Bureaucracy, etc.
By the time you're operating something at the scale of the entire planet, having the benefits of scale still exceed the costs of scale will happen approximately never.
Maybe.. and "a few" was pulled out of thin air, but these machines were national treasures with immense R&D expense. Think rockets, heavy aircraft, and lithography.. not commodities or software. Having stuff in these categories is kind of "you have to be this tall to ride the ride"
The history is complicated and a side quest to the conversation here, but a free market did play out in the US and became fever pitched after AT&T was hand tied in the 1980s.
A free market means if you can do something better/cheaper/faster, or at least convince other people of the promise, you have a shot. The more that come (think of a gold rush), the potential returns diminish so it will eventually be hard to either acquire revenue/customers or funding for speculative approaches if they are capital intense.
Also, ironic to the conversation, the "best" machine vis a vis when and what, came out of the monopoly: the 5ESS. The Bell System was a reflection of a different culture and values system than what the US has today post leveraged buyout conglomerates and software company monopolies.
The alternative to Chinese goods is not locally made goods for the majority of people. It's either Chinese goods that we pretend are locally made, or it's nothing because they can't afford the local stuff.
Cheap good for decades has meant companies have been able to depress wages to the point no one can really live without them. Removing the cheap goods without also giving up massive corporate profits would just mean most people collapse into poverty.
Nobody wants to do the hard work of developing industry, reducing cost of living and doing business so workers are more competitive, and changing all the rules that make China 10x more attractive for this sort of thing.
real wages in western countries are down because 1. regressive inflation on essential goods like energy is faster than both wages and luxury goods and 2. rent and house prices (= mortgage costs) are up because of corporate lobbying and rich nimby homeowners.
that means if employers want to pay workers fairly they need to pay a lot more than in other countries with a cheaper economy. but even the inflated wages are not growing fast enough to catch up with cost of living. so yeah wages are too high compared to the rest of the world but also too low relative to the gdp and growth rate and corporate profits.
> that means if employers want to pay workers fairly they need to pay a lot more than in other countries with a cheaper economy.
"Pay workers fairly" isn't something that companies in a competitive market can choose whether to do. If labor costs are high, they can either pay them, move operations to somewhere else, or stop operating. If labor costs are low, paying more than that would cause them to have higher prices than competitors.
What this implies is that countries with e.g. inflated housing costs will see operations to move to other countries whenever that's feasible, and indeed this is what we see. This isn't companies choosing to do this -- different companies will do different things, but then the ones doing the thing that requires them to have higher prices will be out-competed.
You can't fix that by admonishing them to "pay workers fairly", you can only fix it by increasing the domestic supply of housing and energy.
They're banning Polestar cars that are designed in Sweden (I guess) and made in the US... because the car's Google firmware is Chinese-owned. This case isn't about saving jobs (that's what tariffs are for); it's a misguided attempt at privacy regulation.
If you go to China you will see plenty of KFC, Starbucks, Apple, and Tesla. American companies that all make billions out of the Chinese market.
Yet the US government seems happy to play games like this; there must be someone thinking - hey the shoe could soon be on the other foot? Maybe we should cool it a bit ...
Those are the exceptions that prove the rule. It's very difficult for US or Western companies in general to do business in China without opaque restrictions, corruptions, and share ownership hoops. If the US is playing games, then it's closer to kids playing soccer on weekends; China is already in the pro leagues.
Maybe Volvo still does and it's a mystery why they can still sell here. Maybe Volvo doesn't and there is no story here.
But if the car talks to China and gets updates from China, the US doesn't care if it's built here.
The battery, engine and everything else is absolutely Chinese made. I don’t know how much assembly there is honestly but i feel the Geely, err i mean Polestar was a little close to that line.
I will say the laws around this indicate just how ridiculous tariffs can be. There’s always some line to press up against and honestly if electric motors, batteries, car bodies and wheels from china have different tariffs to a car as a whole it’s always going to lead to china shipping those parts in an easy to bolt together way to ‘make a car’.
"Ford imported all of its first-generation Ford Transit Connect models as "passenger vehicles" by including rear windows, rear seats, and rear seat belts.[1] The vehicles were exported from Turkey on ships owned by Wallenius Wilhelmsen Logistics (WWL), arrived in Baltimore, and were converted back into light trucks at WWL's Vehicle Services Americas, Inc. facility by replacing rear windows with metal panels and removing the rear seats and seat belts.[1] The removed parts were not shipped back to Turkey for reuse, but shredded and recycled in Ohio.[1] The process exploited the loophole in the customs definition of a light truck; as cargo does not need seats with seat belts or rear windows, presence of those items automatically qualified the vehicle as a "passenger vehicle" and exempted the vehicle from "light truck" status. The process cost Ford hundreds of dollars per van, but saved thousands in taxes.[1]"
The Volvo distinction is ... I mean maybe the Volvo software stack is in Europe or the US. Maybe it's also in China!
I do not really subscribe to this philosophy but what's going on isn't a "Polestar would be tar riffed" thing. It's an outright "you can't sell em" thing
There's a whole industry around reverse engineering tariff classifications to find ways to minimize all-in manufacturing cost.
For example, let's say you sell air purifiers.
Option 1 is to import an air purifier and pay the 25% tariff (or whatever the actual duty rate is) on air purifiers.
Option 2 is to import a widget that gets classified as a fan (with 5% duty) and import a widget that gets classified as an air filter (with 10% duty), then put them in the same box somewhere in the US.
Both are sold to consumers as an air purifier. But one of the options minimizes total cost to the manufacturer.
But politicians can never resist exceptions and carve outs and then the game starts again
Isn't that just going to further advantage multinational corporations that don't have to move currency in order to move resources because they're all within the same corporation?
In 1999 Swedish Volvo spins out and sells Volvo Cars to Ford (Volvo Sweden continues making trucks and heavy equipment) for 6.45 B USD.
In 2010 Ford sells Volvo Cars to Geely for 1.8 B USD.
iN 2017 Geely spins out Polestar from Volvo Cars. In 2021 Geely IPOes Polestar at NYSE for 20 B USD.
Leonardo DiCaprio-Backed Electric Automaker Polestar Valued At $20 Billion In SPAC Deal
https://deadline.com/2021/09/leonardo-dicaprio-backed-electr...
Polestar, the electric vehicle company backed by Volvo of Sweden and Leonardo DiCaprio was valued at $20 billion in a SPAC deal that will take it public.
Feds deny Polestar authorization to sell cars in US from model year 2027
https://news.ycombinator.com/item?id=48678494
But Geely can throw down the gauntlet by building Polestars and relabeling them Volvos.
It's all just this lawless personal fealty shit.
Are the people who don't like it going to withdraw those powers the next time they have the opportunity? The main alternative is more of this.
But what annoys me the most about the article is this constant praise of „China Speed“, Cost-Advantages and Love of the Free Market, as if not every single Chinese Automaker, including its Suppliers down to the tiniest screw is a State owned entity, massively subsidized and in general part of a rigged market.
This is not to take from the accomplishments of the Chinese, but a major part of the last 30+ years of development is just massive screwing and exploiting the western open market and its companies. Yeah, we’ve not forgotten the droves of people blatantly stealing IP on every trade show imaginable and a state completely absent from enforcing IP when ever another Chinese car is dropped to the market that looks 100% like a Benz, Porsche or Land Rover.
I'm not saying "trust the government", not at all. But meddling in China trade is absolutely not meddling with the free market.
Ideally what you would want is to get China to stop doing that, but now propose a mechanism to get them to.
https://www.mozillafoundation.org/en/privacynotincluded/cate...
Polestar is predominantly Chinese-owned. Federal Connected Car Rules instituted a ban on the company selling cars in the United States.
I don't see any of those on the mozillafoundation page, per @andsoitis.
It is silly to credulously pretend that the excuse about Chinese software has even a whiff of legitimacy.
(Though I thought that anybody as smart as you think you are would've inferred that without issue)
Their cheap exports: sinister pump and dump
Government subsidised corn syrup in everything.
> Their cheap exports: sinister pump and dump
Hang on, are you just talking about American on both sides of the pros and cons
Once upon a time nations understood the issues better: https://en.wikipedia.org/wiki/List_of_telephone_switches
This is a massive lie monopolists tell you to justify anti-competitive mergers.
Increasing entity size has economies of scale (amortizing fixed costs over more units) and diseconomies of scale (bureaucratic overhead, long-distance transportation costs, etc.)
Economies of scale peter out with increasing entity size. Amortizing a $1000 fixed cost over 100 units instead of 10 saves $90/unit. Amortizing the same $1000 fixed cost over a trillion units instead of a million saves less than one tenth of one cent per unit.
Diseconomies of scale metastasize with increasing entity size. Entity size exceeds Dunbar number, language barriers and timezone asynchrony, corporate politics, independent jurisdictions imposing mutually-incompatible legal requirements, insufficient competition compromises incentives for efficiency as long-term incumbents succumb to Iron Law of Bureaucracy, etc.
By the time you're operating something at the scale of the entire planet, having the benefits of scale still exceed the costs of scale will happen approximately never.
The history is complicated and a side quest to the conversation here, but a free market did play out in the US and became fever pitched after AT&T was hand tied in the 1980s.
A free market means if you can do something better/cheaper/faster, or at least convince other people of the promise, you have a shot. The more that come (think of a gold rush), the potential returns diminish so it will eventually be hard to either acquire revenue/customers or funding for speculative approaches if they are capital intense.
Also, ironic to the conversation, the "best" machine vis a vis when and what, came out of the monopoly: the 5ESS. The Bell System was a reflection of a different culture and values system than what the US has today post leveraged buyout conglomerates and software company monopolies.
Cheap good for decades has meant companies have been able to depress wages to the point no one can really live without them. Removing the cheap goods without also giving up massive corporate profits would just mean most people collapse into poverty.
They just want to ban even more things.
People make stuff like this abroad because wages are too high here to make a profit, not too low.
that means if employers want to pay workers fairly they need to pay a lot more than in other countries with a cheaper economy. but even the inflated wages are not growing fast enough to catch up with cost of living. so yeah wages are too high compared to the rest of the world but also too low relative to the gdp and growth rate and corporate profits.
"Pay workers fairly" isn't something that companies in a competitive market can choose whether to do. If labor costs are high, they can either pay them, move operations to somewhere else, or stop operating. If labor costs are low, paying more than that would cause them to have higher prices than competitors.
What this implies is that countries with e.g. inflated housing costs will see operations to move to other countries whenever that's feasible, and indeed this is what we see. This isn't companies choosing to do this -- different companies will do different things, but then the ones doing the thing that requires them to have higher prices will be out-competed.
You can't fix that by admonishing them to "pay workers fairly", you can only fix it by increasing the domestic supply of housing and energy.
https://en.wikipedia.org/wiki/Dumping_(pricing_policy)
Yet the US government seems happy to play games like this; there must be someone thinking - hey the shoe could soon be on the other foot? Maybe we should cool it a bit ...
Same goes for Thinkpad/Motorola, but I guess there at could argue these are not original Chinese brands.