Anfavea Calls for Higher Tariff on Chinese Vehicle Imports

Brazil’s automotive association, Anfavea, seeks to reinstate a 35% tariff on Chinese imports to combat a surge in electric and hybrid vehicles affecting local production and jobs. The association highlights that Brazil’s tariffs are significantly lower compared to major markets, raising concerns over foreign trade imbalances. Despite the challenges, investments from companies like BYD could enhance local manufacturing and job creation.

Brazil’s National Association of Automotive Vehicle Manufacturers (Anfavea) is advocating for a reinstatement of the 35-percent tariff on Chinese vehicle imports due to a surge in electric and hybrid cars entering the market. The association’s statement emphasizes that this tariff increase is essential to maintain balance in foreign trade, safeguard production, and protect jobs within Brazil’s automotive industry. Sharp tariff cuts made last year led to reduced tariffs for electric vehicles (18 percent), plug-in hybrids (20 percent), and hybrids (25 percent), prompting the call for reinstatement.

Anfavea points out that Brazil’s low import barriers are unique compared to other countries with established automotive industries, noting that Chinese manufacturers are now targeting the Brazilian market due to reduced tariffs. Brazil, being the sixth-largest car market globally, is described as an “easy target” for these imports. Even with a proposed increase to 35 percent, Brazil would still have lower tariffs than the European Union (48 percent) and North America (up to 100 percent).

The influx of imports is seen as a threat to the stabilizing automotive sector, which is recovering from previous economic crises and the impacts of the COVID-19 pandemic. Anfavea warns that without a proper trade balance, the automotive industry, which supports over 1.3 million jobs, faces severe risks. This warning comes as investments in electric vehicle development amount to 180 billion reais (approx. US$31.27 billion).

Despite the concerns over Chinese imports, Anfavea supports investments from companies like BYD and Great Wall Motor, viewing these as crucial for developing local manufacturing. Maintaining low tariffs, they argue, could hinder prospective jobs and investment projects that could revitalize the automotive sector.

The incoming BYD factory, currently being constructed in Bahia, is expected to create 10,000 jobs, which is significant compared to the job losses from Ford’s plant closures, affecting around 70,000 jobs in the supply chain. Furthermore, BYD’s operations are anticipated to enhance automotive production in Bahia from an initial capacity of 150,000 units, with projections of reaching 300,000 units by 2028. Closures like those of Ford, which have weakened Brazil’s automotive sector, highlight the necessity for new investment and job creation in the industry.

Anfavea’s push for a tariff increase on Chinese vehicle imports is a response to a significant influx of foreign electric and hybrid cars disrupting Brazil’s automotive market. The proposed tariff reinstatement aims to maintain trade balance and protect local jobs. While concerns about Chinese competition persist, investments from companies like BYD signify potential growth and revitalization for Brazil’s automotive industry, which faces challenges from past plant closures and economic instability.

Original Source: macaonews.org