Joe Biden has found a new way for electric cars to kill the economy

A $2.5 trillion global industry that supports countless jobs is now at risk of moving from the West to the East. We have grown increasingly sceptical that this could be China’s century. But if it captures the auto industry, perhaps it just might be.

Here’s the problem, however. Massive tariffs are not the best way to respond. From American steel to European agriculture and food production, they have been shown to reduce choice, feed inefficiency, while reducing wages for workers and raising prices for consumers. 

As it happens, the Western auto industry of the 1960s and 1970s is perhaps the best example of that. When the Japanese manufacturers first came into the market, with cheaper, better made cars, they posed an existential threat to the traditional giants. Eventually, they upped their game, but if they had been protected by tariffs they would not have needed to, and consumers would have suffered.

There is a far better way out of this mess. We could simply drop the obsession with electric vehicles, remain supportive of the move away from petrol and diesel, but be neutral on whether the next generation of cars should be powered by batteries, hydrogen, by “green fuels”, or by some other technology that has yet to be developed. And at the same time, we should leave the market completely open, so that manufacturers have to compete globally to offer the best possible product at the lowest possible price. 

Biden is trying to protect the West’s biggest industry with his EV tariffs. He may end up destroying it instead.