Investment in Mexico based auto manufacturing ahead for Chinese EV makers.

> The recent BYD announcement of its new automotive factory in Mexico is huge, not just for its scope, but because of the issues it raises. By setting up production in Mexico and abiding by the USMCA rules of a specific amount of North American content and labor, BYD’s products will qualify for the little or no tariffs provided by the agreement. This means that technically BYD can manufacture its products in Mexico and avoid the 102 percent tariffs when exporting its Mexican-manufactured products to the U.S. This will totally help it circumnavigate the U.S.-China trade war and have access to the huge U.S. EV market.

https://www.krwg.org/local-viewpoints/2024-07-20/recent-anno...

Does anyone know if there is some reason a Chinese manufacturer couldn't just as well setup a manufacturing plant in the U.S.? I mean besides the higher costs of labor in the U.S. compared to Mexico. Like are there U.S. laws in place that limit this? Or Chinese laws? For example, there are many Japanese companies that run automobile plants in the U.S..

So the argument for the existence of tariffs is that the Chinese government provides unfair subsidies to its EV manufacturers.

By setting up shop in Mexico, the EV manufacturer will be locating equipment in Mexico, buying material in Mexico, hiring Mexican workers, etc. So then much of that subsidy is being provided to Mexico rather than China, yes? And the small amount that flows back into China is mostly in the form of profits that flow into the pockets of a bunch of already wealthy people.

You have to wonder why China is ok with this happening. It seems like a terrible use of their public money.

China gets to project and grow their leadership in the EV space outside the Mainland while increasing their importance in a country that’s part of the US’s sphere of influence. Big win.