China announced that it has resumed talks with the European Union to lower trade barriers and increase economic cooperation, with specific focus on electric vehicles, in response to US tariffs – showing another way that Trump’s actions will bring ruin to American manufacturing.

Tariffs don’t work. We said it before when Biden implemented auto tariffs and when Europe did too, and we’ll say it again until we don’t have to say it anymore.

There are some potential benefits or situations that they can be used in, but when they are decided on haphazardly, not targeted towards any particular industry or country, not accompanied by onshoring incentives, and not done in concert with allies to produce a desired effect, they tend to just be bad for the country imposing them. And we’ve already seen how the last round of tariffs on China didn’t work, instead resulting in job losses and inflation for Americans.

They work especially poorly when implemented by someone who routinely shows, with every public action and statement that he makes, that he understands nothing about the world or even about his own policies. When tariffs are implemented by fiat, under a false emergency, by an entity that doesn’t have the Constitutional authority to do so, and are changed every day, they will tend to work even worse at producing any sort of desirable effect for the country implementing them, or at allowing businesses to plan around them.

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As you likely already know, this latter tactic has been the one chosen by convicted felon Donald Trump, who recently wandered back into the Oval Office (despite that there exists a clear legal remedy for insurrectionists) and has apparently dedicated himself to tanking the US economy as much as possible and in the stupidest possible ways.

Recently, he announced huge tariffs on every country, claiming them as “reciprocal” tariffs for PR purposes, even against countries that do not levy tariffs against the US. It turns out, the numbers behind these tariffs are based on a dumb formula that didn’t even use the right numbers, ignored entire economic sectors (like services, which US is a net exporter of), and included uninhabited islands like Heard & McDonald islands near Antarctica, suggesting they were not generated intentionally by a thinking human but rather auto-generated based on a list of countries.

This chaos has resulted in significant International response, with just about everyone pointing out what a poor idea all of this is. For an encapsulation of much of what’s wrong with these tactics, listen to this speech by the Prime Minister of Singapore:

And Europe has responded by imposing retaliatory tariffs on the US.

China and the EU are not the only countries that the US has pushed away with these tariff discussions. Our closest neighbor, Canada, is increasingly seeking cooperation from elsewhere after being unreasonably targeted with tariffs by the US, and polling for the upcoming Canadian election swung by about 25 percentage points as Canadians have gained a new sense of national unity in the face of trade attacks from the US. The close ties between the US & Canadian economies can be seen in job losses in both countries as a result of the tariffs, mere days after they were implemented.

And today, we’re seeing one specific example of how these tariffs will benefit the main country they’re targeted at harming, China, as the country has announced that its seeking closer trade cooperation with the European Union.

China announces US tariffs are pushing China & EU closer

China’s commerce minister announced today that China had talks with EU earlier this week via a video call. The announcement is light on details, but states that further talks will begin soon with an emphasis on deepening trade, investment and industrial cooperation between Europe and China.

Specifically, China said that there would be discussion of minimum price commitments for electric vehicles (which, to be clear, are also anticompetitive, just slightly less so). It also said that the motivating factor behind these talks is the tariff chaos happening in the US right now.

In October, Europe enacted a tariff on Chinese EVs up to 35.3%. Europe claimed that this was due to unfair subsidy practices by China, despite that Europe also subsidizes its own EV industry (and rightly so). China responded by levying its own tariffs on European products like brandy.

So today’s announcement suggests that there may be some reversal of those tariffs, as long as China promises not to import EVs at a price that European manufacturers can’t match. And resumption in these talks will mean that China gains more prominence on the international stage as an exporter, while the US fades away in the same realm.

Tariff chaos is handing world leadership to China

Similar talks occurred between the US and Japan in the early 1980s, including minimum prices and import quotas, after it became apparent that Japanese automakers had far exceeded the Americans in efficiency. While this did offer a lifeline to the US auto industry, Japan rode that high to five decades of export dominance, being the largest auto exporter in the world from then until now – where it was only recently eclipsed… by, you guessed it: China.

China already has a dominant position in the global EV industry. The country has put significant effort into developing its industrial base towards electrification and as a provider of cleantech and its components, something that the US was late on the train to do (and which Trump and republicans are trying to reverse). It’s able to produce high-quality vehicles at lower prices, and with its own technology like LFP batteries, which are cheaper and more durable (though less energy dense).

The US could compete with this by incentivizing local manufacturing (as it did under Biden) and leveraging the soft power it has always held on the international stage to keep trade barriers low and cooperation high between it and some of the world’s largest consumer blocs – or it could do the wrong thing and push all other countries away, letting China swoop in and gain power as the US abandons the world.

But America seems determined to make its own lot worse, despite ample warnings that all of this would happen.

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