Brazil’s Automotive Association Seeks Higher Tariff on Chinese Imports

The Brazilian National Association of Automotive Vehicle Manufacturers (Anfavea) is urging the government to reinstate a 35-percent tariff on electric vehicle imports from China due to increased foreign competition that threatens local production and jobs. Although Anfavea welcomes investments from companies like BYD, they argue that low tariffs could hinder domestic growth and stability within the industry.

The Brazilian automotive association is advocating for an increase in tariffs on electric vehicle imports from China. This initiative arises due to an influx of these vehicles impacting local production, jobs, and investments. The National Association of Automotive Vehicle Manufacturers (Anfavea) calls for a restoration of the previously reduced 35-percent tariff, previously lessened as part of an effort to encourage electric vehicle adoption.

Anfavea has expressed concerns that the lowered tariffs on electric vehicles (18 percent), plug-in hybrids (20 percent), and other hybrids (25 percent) have created a foreign trade imbalance that threatens the local automotive industry. Their warning emphasizes that Brazil lacks adequate import barriers compared to other significant automotive markets, rendering it vulnerable to Chinese manufacturers who have begun aggressively targeting the Brazilian market.

Brazil stands as the sixth-largest car market globally, and even with a proposed return to a 35-percent tariff, it would remain behind the European Union’s 48-percent tariffs and significantly lower than the maximum tariffs of 100 percent in the US and Canada. Anfavea contends that the surge in imports could destabilize a sector that has only recently emerged from economic challenges and the pandemic, potentially jeopardizing the industry and over 1.3 million associated jobs.

Despite concerns regarding sweeping Chinese imports, Anfavea expresses support for specific investments from companies such as BYD and Great Wall Motor to establish manufacturing capabilities in Brazil. They argue that maintaining low tariffs risks delaying these investments and the associated job creation essential for bolstering the domestic automotive economy.

BYD’s new factory, acquired from Ford in 2023 and under construction, is projected to create 10,000 jobs upon opening. This is notably significant as it surpasses the number of jobs lost due to Ford’s earlier closures of its Bahia plants, which had repercussions for approximately 70,000 jobs across the supply chain.

Moreover, the closure of Ford’s São Bernardo plant in 2019 exemplifies the challenges faced by the Brazilian automotive sector. BYD’s establishment in Bahia aims to significantly enhance automotive production, with initial capacities of 150,000 units expected to grow to 300,000 by 2028.

The Brazilian automotive association’s call for increased tariffs on Chinese electric vehicle imports underscores the critical need to maintain a healthy trade balance within the local automotive sector. The proposed tariff increase aims to protect local jobs and encourage investments in vehicle manufacturing. While foreign competition poses challenges, strategic partnerships with companies like BYD can bolster domestic production and employment opportunities, crucial for sustaining Brazil’s automotive industry.

Original Source: macaonews.org