On April 2, the "Reciprocal Tariff Executive Order" signed by the Trump administration propelled China's comprehensive tax rates for new energy products to unprecedented heights: photovoltaic modules soared to 104%, power batteries reached 82.4%, and tariffs on complete new energy vehicles exceeded 120%.

This wave of trade protectionism, cloaked in the rhetoric of "America First," triggered a global industrial upheaval. The EU swiftly responded with the "Net Zero Industrial Act," Southeast Asian transit trade routes were disrupted, and the share prices of Japanese and Korean automakers plummeted. The global new energy supply chain is undergoing its most intense regional restructuring since the 1970s. Amidst this storm, how can new energy automakers break through the encirclement?

Tariff Storm, Market Turbulence

According to AlixPartners, a consulting firm, if tariffs are imposed on auto parts, the cost of each American-made vehicle will rise by $4,000, translating to an annual cost increase of $40 billion.

Moreover, the far-reaching impact lies in the irreversibility of supply chain reorganization. Cox Automotive predicts that if tariffs take effect, daily production in American factories will decrease by approximately 20,000 vehicles, a 30% drop in production capacity. This shrinking capacity compels automakers to reassess their global layouts, yet the costs and time involved in transferring production lines are challenging to balance.

For Ford, relocating production lines back to the United States would cost billions of dollars and take years. Similarly, Hyundai Motor's recently announced $21 billion investment plan in the United States cannot alleviate export pressure in the short term.

Tariff barriers are distorting market competition. Data from the American Automobile Association (AAA) reveals that the average selling price of imported cars will increase by 8%, while domestic cars will also rise by about 3% due to higher parts costs. This price leverage may alter consumer choices, potentially shifting towards lower-priced used cars or local brands, leading to a decline in imported car sales. The National Automobile Dealers Association (NADA) predicts an overall sales drop of 10%.

Survival Strategies of Automakers: A World of Extremes

① American Automakers: Despite Tesla being exempt from tariffs on complete vehicles, 65% of its parts rely on overseas supply chains, with chip tariffs adding $188-$219 per vehicle.

More critically, American consumers are more price-sensitive than anticipated regarding imported cars. A 25% tariff has caused Hyundai's sales in the United States to plummet by an estimated 15%, while Tesla's Q1 2025 deliveries fell by 13% year-on-year, indicating that protectionist policies cannot mask market downturns.

Ford and GM, despite maintaining production capacity in Mexico through the USMCA agreement, still face a 15% increase in tower costs due to upstream steel tariffs, exposing the fragility of the local supply chain.

② Japanese, Korean, and German Automakers: The Hyundai Motor Group has emerged as the biggest loser, with the cost of Korean export models surging by $7,500 per vehicle, forcing it to suspend its $21 billion investment plan in the United States.

Japanese automakers have demonstrated the resilience of their supply chains. Toyota boasts localized production capacity exceeding 1 million vehicles in the United States, and with the support of 1,000 policy consultation windows established by the Japanese government, it has kept the impact within manageable limits.

German automakers find themselves in a dilemma. Volkswagen's ID.3 faces price pressure from China's MG4 in Europe, yet it relies on Contemporary Amperex Technology Co. Limited's (CATL) battery factory in Michigan.

③ Chinese Automakers: Chinese automakers have showcased remarkable tactical flexibility. BYD has adopted a "Southeast Asia Springboard" strategy, establishing a $1 billion production base in Thailand while simultaneously advancing the layout of European data centers.

SAIC Motor, leveraging the MG brand, achieved a 21.2% increase in European sales in the first two months of 2025 against the trend. NIO has adjusted its strategic focus, temporarily postponing plans for the US market to concentrate on "Belt and Road" countries, with exports accounting for over 70% of its total sales.

Technological innovation has become the key to breaking the deadlock. BYD's "Megawatt Flash Charging" technology enables a driving range of 470 kilometers in just 5 minutes, while CATL's sodium-ion battery mass production technology for vehicles is the most mature globally.

Countries: Swift Countermeasures

Trump's tariff policy is sparking a butterfly effect. The European Union, Japan, and South Korea have swiftly announced countermeasures.

Canada will establish a C$2 billion "Strategic Response Fund" to safeguard the Canadian auto industry threatened by US tariffs. French Minister of Economy and Finance Eric Lombard will commence formulating "countermeasures" against American goods in mid-April.

South Korea's Minister of Trade, Industry, and Energy, Ahn Deok-keun, stated that all communication channels would be utilized to engage with the US government and provide support for companies to maintain stable business operations. Japanese Prime Minister Shigeru Ishiba pledged to take comprehensive measures, including financing, to protect local businesses threatened by tariffs.

For China, the current impact is not significant. According to data from the China Passenger Car Association, China exported 116,000 vehicles to the United States in 2024. Judging from this figure, obstacles to exporting vehicles to the United States have minimal impact on the export business of Chinese brands, whereas American automakers producing in China are more severely affected.

For instance, GM's Buick Envision and Lincoln Navigator SUVs are both assembled in China before being exported to the US market. The former sold about 22,000 units in the United States in the first half of 2024, while the latter sold 17,500 units. If China imposes a comprehensive ban on the export of related products, it will cause GM and Ford to face direct revenue losses of hundreds of millions of dollars in the short term.

Furthermore, Ford's models produced in China not only supply the local market but are also exported to other regions through the global division of labor network. If China interrupts supply, automakers will need to urgently adjust production lines, which may cost hundreds of millions of dollars to rebuild local or third-country supply chains. This process will significantly increase operating costs and delay product delivery cycles.

From Trade War to Supply Chain Reshaping

The global automotive industry is currently experiencing unprecedented turmoil. The United States aims to reshape the global value chain through tariffs but overlooks the intricacies and stickiness of industrial division of labor.

In the long run, this pain is giving birth to a new industrial ecology. Global automakers are compelled to restructure their supply chains, with emerging markets such as Southeast Asia and India potentially becoming new production bases. While this shift may lead to a short-term reduction in production costs, it also increases the complexity of cross-border trade, challenging the stability of global supply chains.

Summary

Amidst the tariff storm, Tesla's Shanghai factory continues to ship vehicles to North America, indicating that the United States cannot remain unaffected and will inevitably face countermeasures. How automakers from various countries will navigate this challenging landscape depends on future policy trends.

References: The Paper "Trump's Tariff Policy Disrupts the Global Auto Industry: How to Break Through the Supply Chain Reshaping"; Business Breakthrough "Industry Research Report: The Impact of Tariff Policy on the Global New Energy Industry and Countermeasures"; 365 Smart Energy "Global New Energy Industry Restructuring Amidst Tariff Storm: China-US Game and Technological Breakthrough"; Spring City e-Road "How Significant is Trump's 'Reciprocal Tariff' on China's New Energy Industry?"