Tariffs on Chinese electric vehicles may not be effective.

The global automakers and politicians are becoming increasingly agitated by the growing influence of the Chinese auto sector.

In the early 1980s, the Chinese auto industry was almost non-existent. Now, the country can produce approximately 40 million vehicles per year, which is enough to meet half of the global demand.

In 2023, approximately 25 million cars were sold in the country, according to Dunne Insights, a company that monitors the auto market in China and other Asian countries. To reduce the surplus, China is increasingly turning to exports. Last year, it shipped cars to over 100 countries, as stated by Dunne Insights CEO Michael Dunne.

According to Dunne and other insiders, it is only a matter of time before Chinese-branded cars are available in the U.S. Although Volvo and its subsidiary Polestar are based in Sweden, they are already owned by a Chinese company, Geely.

"The auto industry of this size and scale is unprecedented," Dunne stated, referring to it as "the great Godzilla."

Despite common privacy concerns, a significant number of American shoppers, particularly younger ones, are open to purchasing a Chinese car, according to surveys.

The Biden administration has imposed stiff tariffs on Chinese EVs, increasing their list price by double, which can be as low as $11,500. The administration claims that Chinese companies have received unfair government support, and their EV imports pose a threat to the Biden administration's significant investments in EVs.

Some politicians have taken a stronger stance. Senator Sherrod Brown, D-Ohio, has stated on social media platform X, "Tariffs are not sufficient. We must prohibit Chinese electric vehicles from entering the US. Absolutely."

In 2024, CEO Elon Musk had previously stated that without trade barriers, most Western automakers would be destroyed by Chinese competition, despite his later criticism of tariffs.

Some auto industry insiders doubt that tariffs will effectively prevent Chinese imports in the long run, and believe they may cause more harm than good.

Recent history demonstrates the constraints of tariffs, according to Bill Russo, a former Chrysler executive and head of a Shanghai-based consultancy called Automobility.

The trade war initiated by President Donald Trump against Beijing may have been aimed at reducing Chinese trade, but it ultimately increased the cost of parts for American automakers, Russo stated. In the end, it may have also accelerated the globalization of Chinese firms by forcing them to invest in other countries to avoid tariffs.

Watch the video to learn more.