The trade war between the United States and China continued this week with its latest salvo – a move that comes amid a heated race for the White House.
On Tuesday, US President Joe Biden announced tariff hikes on imports of various Chinese goods, worth $18bn.
Lithium-ion batteries make up $13bn of the total imports, while certain steel and aluminium products, as well as items like medical gloves and syringes, accounted for the remaining $5bn.
Experts say tariffs on these products will likely have limited effects on consumer goods prices and economic growth. The greater gain, they say, may lie at the ballot box, as Biden jockeys for a second term in the White House.
“These tariffs are very much on the margins, and the impacts on the economy will be a rounding error,” Bernard Yaros, lead US economist at Oxford Economics, told Al Jazeera.
While the tariffs do not change much for the US economy, it is still “good politics to do this”, especially during an election year, Yaros added.
Projecting strength
The US is set to hold a presidential vote in November, and Biden is expected to face his predecessor, former Republican President Donald Trump, in a tightly fought race.
Trump has long sought to project a tough-man image, particularly in foreign policy and the economy, while framing his Democratic rival as “weak”. Biden, however, has sought to deflect that criticism by imposing policies that, in some cases, build on Trump’s.
A January paper (PDF) from the National Bureau of Economic Research suggests that tariffs can pay political dividends, even if they do not translate into “substantial job gains”.
The paper looked at the period from 2018 to 2019, when Trump slapped stiff tariffs on China and other countries, targeting products like aluminium, washing machines and solar panels.
It found that residents in US regions that were more exposed to import tariffs became less likely to identify as Democrats and more likely to vote Republican.
The report concluded that voters “responded favourably” to the tariffs “despite their economic cost”, which came in the form of retaliatory tariffs from China.
“Tariffs are good politics, even though the economics don’t work,” Yaros said.
Appealing to the Rust Belt
Biden and Trump are in a neck-and-neck race, with some polls showing the Republican candidate edging out the incumbent in key swing states.
A poll this week found that former US President Donald Trump had an advantage in a few pivotal states over President Biden [File: Brendan McDermid and Elizabeth Frantz/Reuters]
A poll this week from the New York Times, Siena College and the Philadelphia Inquirer, for instance, found that Trump had an advantage in pivotal states like Arizona, Nevada and Georgia.
Biden appeared in one of those states, Pennsylvania, last month to announce his intention to triple tariffs on Chinese steel. Pennsylvania is part of the Rust Belt, a region historically known for manufacturing, and the state itself is famed for steel production.
Brad Setser, a senior fellow at the Council on Foreign Relations, said Biden has also sought to protect other US industries, like its burgeoning electric vehicle (EV) sector.
His new trade rules will ensure that the US cannot directly import EVs made in China, Setser explained.
He added that China has built a competitive EV industry on the back of deep government subsidies and could flood the global and US markets with cheap cars if it was not for such measures.
“China, with its significant auto needs, provided a lot of subsidies to its EV industry that has led to this strength,” said Setser.
“It needs to recognise that the US and Europe will use some of these techniques [of subsidies and tariffs] to build their own industries. It’s unrealistic for China to object to other countries doing the same thing.”
Protecting the American auto industry will also help Biden in the polls. The sector is historically centred in Michigan, another key battleground state where Biden has recently faced backlash.
Michigan is the birthplace of the “uncommitted” movement, which encouraged Democrats to withhold their votes from Biden during the primaries and cast ballots for the “uncommitted” option instead.
The protest was seen as a part of a broader, largely progressive backlash to Biden’s unwavering support for Israel’s war in Gaza.
Looking ahead to November
However, the experts who spoke to Al Jazeera questioned whether Biden’s newly announced tariffs would move the needle at election time.
The US imported $427bn in goods from China in 2023, but it only exported $148bn to the country in return, according to the US Census Bureau.
That trade gap has persisted for decades and become an ever more sensitive subject in Washington, particularly as China competes with the US to be the world’s largest economy.
While the trans-Pacific trade has benefitted both countries – providing cheap goods to American consumers and a large market to Chinese manufacturers – it remains a contentious issue, especially at election time, because of a history of US manufacturing jobs moving overseas.
US politicians have also raised concerns over privacy, as Chinese technology enters the North American market.
Although China has promised retaliation for the latest round of tariffs, experts say it will likely be symbolic as the US tariffs themselves are very targeted.
“We don’t assume the retaliation will be anything disruptive,” said Yaros. “They’re not going to up the ante. That’s not been their MO [modus operandi] in the past when the US has imposed tariffs.”
Western car makers, already bruised by the scramble among themselves for a share of the electric vehicle (EV) market, are facing a much more fearsome foe – China and its aggressive investment into the sector.
Tesla, perhaps the best-known of the EV manufacturers in Western markets, saw first-quarter sales down by 20 percent this year, compared with the same period in 2023, and its share price has slumped by more than 25 percent since the beginning of this year.
According to experts, this is at least partially due to the emergence of a much more competitive landscape, with Xiaomi, originally a smartphone manufacturer which is has its headquarters in Beijing, launching its first EV – the SU7 – just a few weeks ago.
Consumers view Xiaomi’s new SU7 at the Xiaomi Electric Vehicle Flagship Store on April 2, 2024, in Beijing, China [VCG/VCG via Getty Images]
The competition from Chinese manufacturers has forced Western EV makers to sit up and take notice.
On a call with analysts in January this year, Tesla boss Elon Musk stated: “Our observation is, generally, that the Chinese car companies are the most competitive car companies in the world.”
“I think they will have significant success outside of China,” he added.
This was quite a change in tone from 2011 when he was asked about competition from BYD (Build Your Dream), China’s largest EV car manufacturer, on Bloomberg TV, and laughed in response. When asked by former Bloomberg anchor Betty Liu, “Why do you laugh?”, Musk mockingly replied: “Have you seen their cars? You don’t see them at all as a competitor. I don’t think they have a great product.”
How popular are Chinese EVs?
Chinese EVs already make up 60 percent of worldwide sales, according to International Energy Agency, a Paris-based energy consultant. Tesla and BYD have been battling it out for market share for the last couple of years.
According to market research firm TrendForce’s February 2024 report, Chinese manufacturers already hold three of the top five spots for global market share – with BYD at 17 percent, GAC Aion at 5.2 percent and SAIC-GM-Wuling at 4.9 percent. Tesla is clinging on to the top spot with a market share of 19.9 percent while German manufacturer Volkswagen is in the fifth spot with a market share of 4.6 percent. By comparison, Chinese manufacturers were responsible for just 0.1 percent of global EV sales in 2012 – just 12 years ago.
How do Chinese EVs compare in terms of safety?
According to 12365Auto, a Chinese website that monitors car quality using a system which counts the number of faults per 10,000 vehicles sold to quantify customer satisfaction, Tesla cars remain at the top and third spots (for different models of car) for the least amount of faults. However, the percentage difference in faults between Tesla and other Chinese EVs is marginal.
Are Chinese EVs much cheaper than Tesla et al?
Currently, some Chinese EV models are available to car consumers in Europe but not in the United States. The nearest country to the US where Chinese EVs are sold is Mexico – and they are somewhat cheaper.
The Dolphin Mini from Chinese manufacturer BYD costs $21,000 to buy in Mexico. The cheapest US equivalent, by comparison, would be the Nissan Leaf at $29,000 or the Chevrolet Bolt at about $27,000. In China, however, the Dolphin Mini costs just 69,800 yuan ($9,640) because of the competition from other Chinese manufacturers.
The price of a BYD Yuan Plus (sold as the Atto 3 outside of China), starts at 119,800 yuan ($16,550) both inside and outside China. While it can’t match those prices, Tesla is already pricing itself to compete with Chinese cars within China. Tesla’s Model Y, for example, starts at 258,900 yuan ($35,766) in China. In the US, it goes for $44,990.
The Xoaimi SU7 costs 215,900 yuan ($29,825) to buy in China – it is not yet available to buy outside the country. Tesla’s Model 3, by comparison, starts at $38,990 in the US.
The Upgraded Tesla Model 3 on sale on October 12, 2023, in Hong Kong, China [Vernon Yuen/NurPhoto via Getty Images]
Why are Chinese EVs so competitive?
The Chinese government heavily subsidises its EV sector, including offering large tax breaks for both consumers and manufacturers.
According to Adamas Intelligence, a Canadian independent research and advisory firm: “From 2024, Chinese buyers would not have to pay tax on a full electric vehicle that has a driving range of at least 200km (124 miles) per charge.”
In June last year, China introduced a 520 billion yuan ($71.8bn) package of sales tax breaks, to be rolled out over four years. Sales tax will be exempted for EVS up to a maximum of 30,000 yuan ($4,144) this year with a maximum tax exemption of 15,000 yuan ($2,072) in 2026 and 2027.
According to the Kiel Institute, a German think tank that offers consultation to China, the Chinese government has also granted subsidies to BYD worth at least $3.7bn to give the company, which recently reported a 42 percent decrease in EV deliveries compared with the fourth quarter of 2023, a much-needed boost.
Chinese EVs also tend to be cheaper than Western-made cars partly because much of the manufacturing process involved in producing car batteries is carried out by Chinese companies. Although the largest cobalt mine is in the Democratic Republic of Congo, in Africa, Chinese companies process the cobalt in those mines. In addition, China owns the third largest lithium mine in the world – in Yajiang, Southwest China’s Sichuan province. Both lithium and cobalt are essential raw materials needed to make the batteries that power EVs.
(L-R) A Han EV electric sedan, a Dolphin all-electric subcompact hatchback, a Yuan Plus all-electric small SUV, a Song Plus DM-i SUV and a Destroyer 05 compact sedan are on display at BYD’s new manufacturing base on June 30, 2022, in Changfeng County, Hefei City, Anhui province of China [VCG via Getty Images]
How are Western countries facing down the competition?
Western car manufacturers also receive some tax breaks from their governments for producing EVs.
The US Inflation Reduction Act, for example, which was signed into law in 2022, allows consumers to receive tax credits against purchases of new and used EVs, ranging from $3,750 to $7,500.
These tax credits are almost double and triple what is available to Chinese consumers but strict guidelines issued by the US Department of the Treasury in January of this year decreased the number of available EVs which qualify for these tax credits from 43 to just 19 vehicles manufactured by Ford, Telsa, GM, Hyundai, Kia, Volkswagen and Chrysler (with limitations to certain models).
The US government is also considering more extreme measures to blunt the momentum of Chinese EVs encroaching on the US car market, however.
In a bid to protect the US auto market, President Joe Biden’s administration is under pressure to increase import tariffs on Chinese electric vehicles. In a letter to the administration, Senators Gary Peters and Debbie Stabenow of Michigan and Sherrod Brown of Ohio, stated: “Allowing heavily subsidised Chinese vehicles to enter the US marketplace would endanger American automotive manufacturing.”
During Donald Trump’s presidency, his administration slapped an additional 25 percent tariff on Chinese cars. The US already applies a 2.5 percent “Most Favored Nation” (MFN) levy to all car imports. This would bring the total tariff to 27.5 percent for Chinese cars. In a March 2024 rally in Dayton, Ohio, former president and Republican presidential hopeful Donald Trump threatened even higher tariffs for Chinese cars being manufactured in Mexico.
“Those big monster car manufacturing plants you are building in Mexico right now and you think you are going to get that – not hire Americans and you’re going to sell the car to us, no,” Trump continued. “We are going to put a 100 percent tariff on every car that comes across the lot.”
The European Union levies a 10 percent tariff on all imported cars. This could open the door for more Chinese EVs in Europe because the current tariffs are lower than US tariffs.
However, during a roundtable meeting with Chinese companies in Paris last week, the European Commission raised the question of whether China’s EV market unfairly benefits from subsidies amid discussion about whether the EU should impose new tariffs on car manufacturers, including car manufacturers from China.
China’s Commerce Minister Wang Wentao rejected the notion that Chinese subsidies were unfair: “China’s electric vehicle companies rely on continuous technological innovation, perfect production and supply chain system and full market competition for rapid development, not relying on subsidies to gain competitive advantage.”
Are there security concerns about Chinese technology?
Last month, the US Department of Commerce said it is considering a probe into whether Chinese cars pose a national security risk.
In February, President Biden said in a statement addressing national security risks to the US auto industry: “China’s policies could flood our market with its vehicles, posing risks to our national security.”
He added: “Connected vehicles from China could collect sensitive data about our citizens and our infrastructure and send this data back to the People’s Republic of China. These vehicles could be remotely accessed or disabled. China imposes restrictions on American autos and other foreign autos operating in China.”
What does the future hold for EVs?
US EVs are not just facing competition from Chinese manufacturers. Costs still pose an obstacle to the wider adoption of EVs by consumers and petrol cars are still cheaper.
However, the raw materials to produce electric car batteries, such as nickel, lithium and cobalt, are becoming cheaper to mine. According to a March report from Goldman Sachs titled Electric Vehicles: What’s Next VII: Confronting Greenflation, the cost of battery packs account for 30 percent of total EV manufacturing costs. “We estimate that reductions in battery costs will bring this proportion down to a steady 15-20% percent during 2030-2040,” the report said.
Growth in the EV market is not just limited to the US, Europe and China. India has seen substantial growth in its EV market. According to the Federation of Automobile Dealers Associations (FADA), which is based in Delhi, between April 2023 and March 2024, the Indian EV car market saw a 91 percent year-over-year increase in car sales to 1.5 million last year. By comparison, the US sold 1.8 million and China sold eight million. Furthermore, Indian-made EVs are being exported. Stellantis, formed by a merger between Fiat Chrysler Automobiles and French PSA Group, recently launched EV exports from India under the Citroen brand. This week, the first 500 Citroen e-C3 models, which were manufactured in India, were shipped to Indonesia.
EVs are expected to rise in popularity. Research shows they are more environmentally friendly than their petrol counterparts, making these vehicles increasingly attractive to consumers. In a guide to electric vehicles, the US Environmental Protection Agency (EPA), states: “Some studies have shown that making a typical electric vehicle (EV) can create more carbon pollution than making a gasoline car. This is because of the additional energy required to manufacture an EV’s battery. Still, over the lifetime of the vehicle, total greenhouse gas (GHG) emissions associated with manufacturing, charging and driving an EV are typically lower than the total GHGs associated with a gasoline car.”
US president’s remarks come as he is seeking to shore up support in key swing state of Pennsylvania.
United States President Joe Biden has opposed the proposed sale of a Pittsburgh-based steel manufacturer to Japan’s largest steel producer, insisting on the need for “strong American steel companies powered by American steelworkers”.
Biden’s opposition to US Steel’s acquisition by Nippon Steel comes as the Democrat is looking to shore up support among unions and blue-collar workers in the key swing state of Pennsylvania ahead of November’s presidential election.
Biden won Pennsylvania by fewer than 100,000 votes in 2020, after former President Donald Trump in 2016 became the first Republican to carry the state since 1988.
Trump said earlier this year that he would block the deal, describing the proposed takeover of the US brand as “a horrible thing”.
“I told our steelworkers I have their backs, and I meant it,” Biden said in a statement on Thursday.
“US Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated.”
US Steel shares slid 6.4 percent following Biden’s remarks, after sinking the previous day on news the president would express his opposition to the deal.
US Steel, the second-largest steel producer in the US, announced in December that it had agreed to be bought by Nippon Steel in a $14.1bn takeover.
The announcement provoked mixed reactions in the US, with some welcoming the prospect of an injection of new capital and technology and others decrying the selling off of an iconic American brand.
The proposed acquisition is currently under review by the Department of the Treasury’s Committee on Foreign Investment in the United States (CFIUS), which is supposed to make decisions without regard to political considerations.
While Biden on Thursday did not explicitly say he would block the deal, he holds sway over CFIUS since the treasury secretary, who leads the committee, serves at the pleasure of the president.
United Steelworkers International, the biggest industrial union in the US, welcomed Biden’s remarks.
“Allowing one of our nation’s largest steel manufacturers to be purchased by a foreign-owned corporation leaves us vulnerable when it comes to meeting both our defence and critical infrastructure needs,” USW International President David McCall said in a statement.
“The president’s statements should end the debate: US Steel must remain ‘domestically owned and operated’.”
The US Chamber of Commerce criticised “attempts to politicise” the CFIUS review process.
“That review will surely support the transaction given Japan’s status as one of America’s most important and reliable allies,” US Chamber of Commerce Senior Vice President John Murphy said in a statement.
“Japanese investment in the US supports nearly one million American jobs, and officials must be careful not to send a chilling signal to international companies that US politics may put their job-creating investments in the US at risk. For these reasons, it’s imperative that the CFIUS review proceed; and if, as expected, it reveals no national security concerns, the sale should proceed.”
Biden’s intervention risks upsetting Tokyo, one of Washington’s closest allies in Asia, as his administration looks to bolster joint efforts to counter China.
Japanese Prime Minister Fumio Kishida is due to visit the White House on April 10 for talks that are expected to focus heavily on strengthening the US-Japan alliance in the face of Beijing’s growing assertiveness.
Before Elon Musk announced that he would pour billions into building his largest Tesla plant in the industrial outpost of Monterrey, Mexico, United States trade winds were already shifting south.
In late 2022, Mexico’s Economy Minister Raquel Buenrostro Sánchez said that 400 companies had expressed interest in relocating from Asia to Mexico. New industrial parks were popping up, many driven by Asian money, and the investments were raining down. By June 2023, some $13bn in investments had been secured, according to Mexico’s secretary of finance and public credit, most for auto or auto parts manufacturers.
New numbers from the US Census last week indicate that Mexico is the US’s top trading partner. In 2023, the US traded $798bn with Mexico as the goods it bought from its southern neighbour surged past China and Canada. The boom around nearshoring – a catchy term that describes the movement of companies closer to their preferred market, in this case, the US – has helped drive Mexico into this position.
“This is not cyclical, this is new,” said Andrew Hupert, a trade expert who has lived in China, and now lives in Mexico.
“What I’m seeing is a diversification of manufacturing. The calls started coming from companies saying, ‘I don’t want all my eggs in one basket’,” said Joshua Rubin, the vice president of business development with the Javid Group, a Nogales, Arizona-based company which helps companies start operations in Mexico.
According to the Federal Reserve Bank of Dallas, Mexico first edged out Canada at the start of 2023, with bilateral trade between the neighbours totalling $263bn in the first four months, as China’s numbers continued their descent. By the end of the year, the US had bought $475bn worth of Mexican goods, compared with $421bn from Canada and $427bn from China, which saw its number drop by 20 percent from 2022.
The nearshoring boom is not exclusive to Mexico. A report in 2022 by the Inter-American Development Bank (IDB) suggested that all of Latin America and the Caribbean was poised to reap the benefits, with as much as $78bn in exports in the near future. Countries such as Argentina, Brazil and Colombia stood to make sizeable gains. But they were all dwarfed by Mexico, which accounted for nearly half of the IDB’s forecast nearshoring growth. It has caught the attention of the Canadian auto parts lobby, which has started to express concern that Chinese investments in Mexico will end up undercutting Canadian jobs.
How Mexico got into this position is as much a result of its own initiatives and growth as it is geopolitical forces outside of its control. And experts suggest it is just beginning.
“It’s a world of opportunities now,” said Marco Villarreal, who helped Hisun Motors, a Chinese-based manufacturer of ATVs and UTVs, open up manufacturing facilities in Saltillo, a city on the outskirts of Monterrey.
Villarreal, who had long careers at General Motors and Caterpillar, recalled a tour of industrial parks in the Monterrey-Saltillo region in late 2020, and the head of Hisun’s US operations expressing surprise at the extent of the manufacturing muscle before him.
“Marco, what’s happening in Mexico is what happened in China 30 or 40 years ago when we started a manufacturing expansion,” Villarreal recalled the owner telling him.
“There is a growing interest from Asia to set up a footprint in Mexico,” agreed Alfredo Nolasco, a business development specialist who founded the Mexican consultancy Spyral.
What explains the boom?
Mexico has long carved out a space as a manufacturing hub for the US, through tariff and duty-free programmes that have enabled companies to set up so-called “maquiladoras” – as the factories were dubbed in the 1990s – to assemble products exclusively for export. The North American Free Trade Agreement, and its revamped cousin known as the United States Mexico Canada Agreement, was another boon for the southern partner.
Mexico has programmes to build products like cars exclusive for exports [File: Jorge Duenes/Reuters]
But a confluence of new factors has converged to create the surge we are seeing today. The one most often highlighted by experts on both sides of the Mexico-US border is the trade war between China and the United States. It began under the administration of former US President Donald Trump and has really taken off under President Joe Biden, said Hupert.
Hupert has been warning of the dwindling gains in China for years, arguing that compliance costs were going to outweigh savings.
“To comply with Chinese regulations and US regulations at the same time is more or less impossible,” said Hupert. “The United States in many industries is asking for information that the Chinese could at any time deem to be state secrets.”
Then there was the COVID-19 pandemic, which exposed a logistical risk which had never really been considered by a globalised economy. Companies were forced to swallow tough supply chain pills as the cost to get containers of goods to North America from China skyrocketed. It killed businesses that were unable to get their products to their markets or moved Mexico into an indispensable position, as was the case for medical supplies going into the US during lockdowns.
All this said, it is not that companies are abandoning China or neighbouring countries altogether, said Hupert, but setting up branches or expanding their Mexico footprint.
“The pandemic left us a very important lesson that took us from the globalisation of production to the regionalisation of production,” said Claudia Esteves, the director general of the Mexican Association of Private Industrial Parks. “It’s practically killing globalisation.”
The war in Ukraine has been an additional factor that caused European interests to reconsider their manufacturing outposts in places like Poland, she added.
“Our good luck is due to our geographic position,” she said. “It’s because we share a 2,000-mile [3,218km] border with the biggest market in the world.”
As a result, the demand for industrial parks has also exploded. Some 50 new industrial parks were under construction in Mexico in 2023 – almost half by Chinese investors, and another 20 percent that are Korean, said Esteves. In 2019, there were 2 million square meters (21.5 million sq ft) of occupied industrial park space. By mid-2023, that jumped to 4.3 million square meters (46 million sq ft). “That’s historic,” she said.
Growth that has been ramping up for decades
While this nearshoring boom is largely around manufacturing, the growth of trade is broader than that.
Mexico’s agricultural sector has seen an ‘astronomical’ boom in past few years [File: Carlos Jasso/Reuters]
Jamie Chamberlain, the chairman of the Greater Nogales Santa Cruz County Port Authority, sees it as part of a trajectory dating back decades. He recalls going to rural farms in Mexico as a child with his parents, who started importing fruits and vegetables in 1971.
In the agricultural sector, the growth has been “astronomical” – when he started in the business in 1987, the import of produce was a business that spanned November to May. “Now, we’re pretty much a year-round industry that imports from every single state in the country of Mexico,” he said. “The berry sector is the largest growth sector and all for export to the United States.”
It is not just demand that has greased this economic wheel. There is forward-thinking involved. In Nogales, for example, the Port Authority started planning to expand its port of entry to manage the increasing flow of trucks when there were 900 to 1,000 crossing into the US every day. Now it is about twice that, in each direction.
“The preparation in infrastructure is so important,” he said.
Cartels and currency
Hupert identifies two potential clouds in this upward trajectory – the instability caused by drug cartels and the currency. “The peso is just too damn strong,” he said. “That and inflation wipes out Mexico’s cost advantage.”
It is not just a cost advantage but a labour supply advantage, said Villarreal. The US does not have the skilled labour many US companies are clamouring for and which Mexico has spent decades developing. It now has more than 50 years of automobile manufacturing under its belt, which means it has a workforce that can take on technical assemblage and is more than qualified for less demanding roles, such as furniture, he noted.
And where gaps do exist, the market forces are already working to fill them. Nolasco, the business development specialist, recalled one client who came to him looking for suppliers for nuts, bolts and washers.
“Even though Mexico is a powerhouse, we realised that for those kinds of simple issues, there weren’t enough,” he said. As demand grows, that labour supply issue may be solved.
“That’s a large opportunity there to develop joint ventures with Mexico and other partners around the world.”
Samsung plans to start manufacturing laptops at its facility in Noida later this year, according to a top company executive. The South Korean tech conglomerate already manufactures its smartphones in the country — these are sold domestically as well as exported — and is already making preparations to begin assembling laptops here. Samsung currently produces its laptops in China and Vietnam, and the laptop models that it plans to produce here are expected to be sold in the Indian market.
TM Roh, Samsung’s Mobile Division President, stated at a media briefing (via Mint) on Monday that the company is preparing to manufacture its laptops in the country. “Noida is a very important production base for Samsung. It is the second largest base for Samsung. There may be some changes at the plant to optimize it as per the global demand but what remains unchanged is the fact that it is an important base for us,” he said.
Last September, it was reported that Samsung was preparing to produce its laptops in the country a month later, at its Noida facility. While it appears those plans were delayed, the company has now confirmed that it will produce its laptops in India.
However, before the three-month period was up, the government reversed its decision and said it would not impose the licensing requirement on imports of laptops and computers. At the time, the government said it would only monitor inbound shipments of these laptops.
Last May, the government announced the PLI 2.0 scheme for IT hardware with an outlay of Rs. 17,000 crore. India reportedly imported computers and laptops worth $7.37 billion (roughly Rs. 61,300 crore) in 2021-22, which fell to $5.33 billion (roughly Rs. 44,300 crore) in 2022-23.
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The cars reportedly have problems with their automatic assisted steering and door latch controls.
Tesla is recalling more than 1.6 million Model S, X, 3 and Y electric vehicles in China for problems with their automatic assisted steering and door latch controls.
China’s State Administration for Market Regulation (SAMR) announced the recall on Friday and said that Tesla Motors in Beijing and Shanghai would use remote upgrades to fix the problems.
“For vehicles within the scope of this recall, when the automatic assisted steering function is turned on, the driver may misuse the level two combined assisted driving function, increasing the risk of vehicle collision and posing a safety hazard,” said SAMR.
The recall also includes 7,538 imported Tesla models made between October 26, 2022 and November 16, 2023, which were found to have a “problem with the door unlock logic controls”.
In 2022, the firm also recalled nearly 128,000 cars in China due to a rear motor inverter defect.
China is a significant market and manufacturing centre for Tesla, and the company’s CEO, Elon Musk, has built close ties with Chinese officials even as US-China relations have soured.
Tesla’s Shanghai production facility, its first “gigafactory” to be built abroad, delivered about 947,000 vehicles in 2023, Chinese state news agency Xinhua reported earlier this week.
The recall comes after a recall in the United States last month of more than two million Tesla electric vehicles to improve its system for monitoring drivers.
It also comes after a two-year investigation by the US National Highway Traffic Safety Administration found the system was defective after a series of crashes while the car was in autopilot mode.
The upgrades are intended to get drivers who use Tesla’s Autopilot system to pay closer attention to the road, and documents filed by Tesla with the US government said that the software will increase warnings and alerts to drivers to keep their hands on the wheel.
Dhaka, Bangladesh — Weeks after turbulent wage-hike protests and subsequent factory closures, Bangladesh’s ready-made garment (RMG) industry, a key revenue earner for the nation, is dealing with a new phase of anxiety: “possible” economic sanctions by the country’s Western partners.
The United States and European Union collectively account for more than 80 percent of Bangladesh’s multibillion-dollar apparel sales, and any sanction on the RMG industry would put a severe dent in its already beleaguered economy, said analysts.
The threat of sanctions from the US arose once Dhaka announced January 7 for national elections in what is likely to be another seemingly one-sided vote.
Those concerns were further boosted in early December when a key garment supplier to the US was warned of sanctions in a letter of credit (LC) from a foreign garment buyer.
An LC is issued by financial institutions or similar parties to guarantee payment to sellers of goods and services after appropriate documentations are presented. It essentially helps in avoiding risk by having intermediate buyer and seller banks that ensure proper payment.
According to the LC, a copy of which was obtained by Al Jazeera, the Western buyer stated: “We will not process transactions involving any country, region or party sanctioned by the UN, US, EU, UK. We are not liable for any delay, non-performance or/ disclosure of information for sanction-based causes.”
Should the clause kick in, the garment manufacturer in Bangladesh would likely incur massive losses as the buyer wouldn’t be liable to make any payment for the orders placed with that apparel producer.
Both industry leaders and government officials have dismissed the threat as a “rumour” and “antigovernment” propaganda and say no such economic sanction can be imposed, especially on the garment sector, as it is a fully compliant industry and abides by all the international labour laws.
Faruqe Hassan, President of Bangladesh Garments Manufacturers and Exporters Association (BGMEA) said that the LC came from a particular buyer, and was not a statutory order or notice by “any specific country or countries”.
“From BGMEA, we have already contacted the buyer and the issue was sorted out. It was just a cautionary clause inserted by the bank who prepared the LC on behalf of the buyers,” Hassan told Al Jazeera, “It doesn’t mean that any country is planning to impose some sanctions on our industry.”
Behind the uneasiness
BGMEA President Faruque Hassan said manufacturers are concerned about the potential of economic sanctions [Faisal Mahmud/Al Jazeera]
Hassan however admitted that many factory owners had expressed their concerns in a recent BGMEA meeting over that LC clause and the “ongoing political turmoil of Bangladesh has given birth to all sorts of speculations”.
Bangladesh’s national election is due in less than three weeks but several political unrests have disrupted the country’s business and economy.
Bangladesh Nationalist Party (BNP), the main opposition party, has boycotted the election amidst concerns of severe poll rigging. That sets up the elections as a repeat of one-sided polls held in 2014, in which Sheikh Hasina-led Awami League won 153 out of 300 parliamentary seats uncontested.
BNP says no free and fair election is possible under a partisan government and gave an example of the 2018 poll, in which it took part. Independent observers termed it a severely “rigged” election which saw Awami League securing 288 out of 300 seats, a result that The Washington Post said could only be expected in a country like North Korea.
For the last few months, opposition parties have been staging protests on the streets to press home the demand of installing a neutral election-time caretaker government.
The government has, since late October, used brute force and court cases to suppress the protests. In November alone, more than 10,000 BNP leaders and activists were thrown in jail. None have received bail so far.
Khondokar Golam Moazzem, research director of Bangladeshi think tank Center for Policy Dialogue (CPD) told Al Jazeera that the current political upheaval has obviously played its role in propagating the widespread notion that Bangladesh’s RMG industry might face an economic sanction.
The United States has already taken a tough stance with a new visa policy for Bangladesh in September in which it said it would impose a visa sanction on “individuals undermining the democratic election process in Bangladesh”.
The warning note in the LC also came at a time of severe unrest in the RMG sector over minimum wage hikes in which four workers died.
Bangladesh has witnessed severe unrest over wage issues for garment workers [Faisal Mahmud/Al Jazeera]
It also coincided with the introduction by the US, Bangladesh’s single largest garment buyer, of the Presidential Memorandum on Advancing Worker Empowerment, Rights, and High Labor Standards Globally.
The memorandum is the Biden administration’s effort “to pursue a whole-of-government approach to advancing worker empowerment and organizing, workers’ rights, and labor standards globally”.
While introducing the bill, the US Secretary of State specifically mentioned a firebrand garment labour activist in Bangladesh and said: “We want to be there for people like Kalpona Akter, a Bangladeshi garment worker and activist, who says that she is alive today because the US embassy advocated on her behalf.”
After the new US bill, the Ministry of Commerce in Bangladesh received a letter from the Bangladesh embassy in Washington, DC in which the embassy speculated that “Bangladesh could be among the countries targeted by the new US Memorandum”.
Al Jazeera has seen the letter and Commerce Secretary Tapan Kanti Ghosh acknowledged its receipt and told Al Jazeera that the Bangladesh government had already informed the US about the recent steps they had taken to protect labour rights in Bangladesh. “We are very serious about labour rights and we are the signatory of all the ILO conventions.”
How serious are the sanction concerns?
Labour rights activist Kalpona Akter says anger is still bubbling in the sector [Faisal Mahmud/Al Jazeera]
Germany-based Bangladeshi financial analyst Zia Hassan told Al Jazeera that the prospect of US sanctions on Bangladesh’s garment industry cannot be ruled out.
“Historical patterns indicate wide visa sanctions are likely in retaliation for suspected election manipulation – a typical American response to alleged voting fraud globally,” he said adding that while the US doesn’t typically impose economic sanctions on grounds of a country’s politics alone, the possible garment trade sanction could hinge on issues of workers’ rights.
“Denial of a fair bargain in wages negotiations, labour violations through threats, imprisonment or even murder of vocal labour advocates may see the US act on its warnings to sanction labour abuse,” he said.
Labour rights activist Akter told Al Jazeera that even though the workers were back at work after the revision of the minimum wage hike, their demands had not been met and the anger over injustice to the workers is still bubbling in the sector.
“Hundreds of our workers were thrown in jail for taking part in the protests and they are not given bail as of now. The hike that was given is not at all sufficient to fight the rising inflations. So the industry’s claim that the workers’ rights are protected is not true,” she said.
“However, we obviously don’t want any sanction on this industry. It will be devastating not only for our workers but also for our economy,” she added.
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