00:00Let's talk to David Bailey, who's Professor of Business Economics at Birmingham University.
00:04It was great to have you on the programme, David.
00:06So, what exactly is BYD asking the courts to clarify or to correct?
00:13And in practical terms, what would change for BYD if it weren't tomorrow?
00:19Well, I think what's interesting about this is that it's the first big Chinese company to challenge the US government in this way.
00:26There's been lots of other companies who have challenged the US government over what it sees as a kind of excessive use of its authority.
00:33And in particular, the president used what was called the International Emergency Economic Powers Act, the IEPA, to justify those tariffs.
00:43But that's being challenged.
00:44There's already a court case from a wine importer, which has gone to the Supreme Court and is being decided on at the moment.
00:51We may hear about that by the summer.
00:54But this is the first time a big Chinese company has also got involved.
00:58And what BYD is essentially saying is the president acted illegally and it acted illegally in putting in place tariffs on imports from countries like Brazil.
01:07Now, why is that a concern to BYD?
01:09It has a big production plant in Brazil and could, in theory, export those cars to the US.
01:15So, that would be what changes for it.
01:16It will suddenly have much more power in terms of the export market.
01:20Is that what you're saying?
01:21Very much so.
01:22So, I mean, you know, BYD is investing heavily in Brazil in a plant which could produce up to 300,000 cars.
01:29It's re-looking at its previous decision not to build a plant in Mexico.
01:33So, he's reconsidering that.
01:35So, if by challenging the US government tariffs were brought down on imports from Mexico and Brazil, that would provide a way into the US market for BYD.
01:46Remember, Chinese-made cars are effectively blocked out.
01:49That was under law which went back to President Biden and the tariffs are over 100% on Chinese-made electric vehicles.
01:55This might be another way into the BYD, into the very lucrative US market.
02:00So, you're talking about levelling the playing field.
02:02And I suppose what you're saying is that if BYD loses, it kind of locks out Chinese EV makers, well, out of the US market in the long term.
02:12Or are there maybe some viable workarounds?
02:14Well, there may be some workarounds.
02:17You already can see, for example, that BYD produces commercial vehicles in the United States.
02:23So, it makes electric buses there, for example.
02:25And also, it's trying to get into the market in terms of batteries.
02:28So, I think there's a question, Mark, about what does the US actually want here?
02:32Does it simply want to decouple completely from China, in which case it's going to block imports and investment?
02:39Or, ultimately, would it like to see investment in the US in making things and in jobs, which is the way the European Union is going?
02:47At the moment, it seems like the US simply wants to block them out completely.
02:50Europe has a very different approach.
02:52You talk about this case as being a bit of a first, a bit of a test case.
02:56I wonder how much of it is really about BYD and how much of it could shape the treatment of all foreign automakers trying to compete in the US.
03:07I certainly think it's a massive case.
03:10And it's certainly a massive case for the Chinese automotive industry, which is, given the slow state of the market in China
03:18and the extreme competitive pressure, is looking to produce around the world, in Southeast Asia, in Brazil, in Mexico,
03:26and then looking to export to, for example, Europe or the United States.
03:30So, this could be potentially very, very significant in the context of China becoming the world leader in batteries and electric vehicles
03:38and the balance of power shifting from the US to China.
03:42US tariffs are meant to be about protecting domestic industry.
03:46I'm wondering, though, if they're actually distorting the global automotive supply chain,
03:52making it more expensive, making it slower, more fragmented, and ultimately more expensive for consumers.
03:59Well, on the consumer side, it's certainly the case that it will push up prices, reduce competition,
04:06and make things more expensive for American consumers, both in terms of imported products, which are now subject to tariffs,
04:11but also in terms of things made in the US, which require components that are coming in.
04:16So, that's absolutely clear.
04:17I think, as well, what the tariffs have been doing is really separating the US from the rest of the global market
04:24and the global supply chain.
04:26And I think what we'll see increasingly is the likes of the European Union, the UK,
04:31increasingly looking to China because it is the technological leader.
04:35So, in the case of, for example, the European Union, which put tariffs on China, it's now rethinking that.
04:40It wants to keep open access to the Chinese market.
04:43It may decide, actually, we need to get closer to China.
04:46And, of course, there were automotive representatives when Keir Starmer went to visit China,
04:52when other European leaders went to visit China.
04:55So, you really feel this is a conversation that's really moving the dial
04:59and that we're going to see maybe more cooperation between Europe, the UK and China.
05:04Yes, I do.
05:05I mean, China is the world leader in the technology.
05:08It's, you know, 20 years ahead.
05:10It's able to produce electric vehicles at 30 or 40 percent lower cost.
05:14European manufacturers simply cannot compete at the moment.
05:16Now, they need to catch up.
05:18But I think reinventing the wheel is very difficult.
05:20What would be much more sensible is to say to the Chinese, look, come to Europe, come to the UK, set up production, start producing here.
05:27Remember, that's exactly what the UK did back in the 1980s with Japanese investment, which reinvigorated the UK auto industry.
Comments