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Trade and the transition to electric vehicles

Published 07 February 2023

How will electric vehicles (EVs) shape automotive trade flows in the future? How has the war in Ukraine affected international trade? What stands in the way of US leadership in digital trade? Our reading list covers the latest developments in global trade.

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EVs and the future of automotive trade | How sanctions and geopolitics affect trade | Effectiveness of US export controls | Will the US write global rules for digital trade? | The real problem with the international trade system | More research from Hinrich Foundation

EVs and the future of automotive trade 

How will EVs shape automotive trade flows in the future? The US hasn’t noticed that China-made cars are taking over the world, reports Bloomberg.  Britain’s carmakers are under threat, says the Economist.  China’s EVs are more competitive in developing countries, writes the Wall Street Journal. Chinese car makers are becoming shipping companies, reports Quartz, while General Motors is investing in a US lithium mine, writes the Financial Times.  

Mentioned publications

  1. The US Hasn’t Noticed That China-Made Cars Are Taking Over the World – Tom Hancock, Bloomberg, January 26, 2023
    China is catching up quickly in electric vehicle exports.
  2. Britain’s carmaking industry is increasingly under threat – The Economist, January 26, 2023
    In automotive manufacturing, Britain has fallen from 13th in the world to 18th in five years.
  3. Developing Nations Aren’t Ready for EVs—Unless They Are Made in China – River Davis, The Wall Street Journal, January 8, 2023
    Chinese EV makers offer highly competitive prices for EVs in price-sensitive developing markets.
  4. Chinese car makers are becoming shipping companies – Mary Hui, Quartz, January 4, 2023
    BYD has amended its business scope to include shipping and freight forwarding.
  5. General Motors invests $650mn in US lithium mine to secure EV battery materials – Harry Dempsey and Claire Bushey, Financial Times, February 1, 2023
    GM works to secure the supply of a key input for EV batteries.

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How sanctions and geopolitics affect trade

How has the war in Ukraine affected international trade? Bruegel provides an analysis.  Russia is finding new import resources, per the Silverado Policy Accelerator. Less than nine percent of Western firms have divested from Russia, finds Simon J. Evenett and Niccolò Pisani in a new study. Despite strains and calls for decoupling, US-China trade is on track to break records, reports Bloomberg.  Brazil and Argentina will develop a new unit of account to facilitate trade (other than the US Dollar), according to MarketWatch. 

Mentioned publications

  1. The impact of the Ukraine crisis on international trade – Zsolt Darvas and Catarina Martins, Bruegel, December 20, 2022
    The impact of the war is felt, but may not be determining current trade flows. 
  2. Russia Shifting Import Sources Amid U.S. and Allied Export Restrictions: China Feeding Russia's Technology Demands – Andrew David, Sarah Stewart, Meagan Reid, and Dmitri Alperovitch, Silverado Policy Accelerator, January 2023
    Despite sanctions, Russia continues to have access to dual-use technologies. 
  3. Less Than Nine Percent of Western Firms Have Divested from Russia – Simon J. Evenett and Niccolò Pisani, SSRN, December 20, 2022
    Study shows that only 8.5% of EU and G7 companies had divested at least one of their Russian subsidiaries.
  4. US-China Trade Is Close to a Record, Defying Talk of Decoupling – Daniel Flatley, Bloomberg, January 17, 2023
    2022 US-China trade flows are on track to break records.
  5. No, Brazil and Argentina aren’t planning a South American version of the euro. Here’s what’s going on. – William Watts, MarketWatch, January 23, 2023
    Brazil and Argentina propose creating a unit of account to help facilitate trade.

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Effectiveness of US export controls

What lessons can we learn from the Cold War about the effectiveness of export controls? Chad Bown gives us a history lesson in Foreign Affairs and a Trade Trends podcast.  The US has come to an agreement with the Netherlands on semiconductor export controls, reports Politico, while Japan is still considering whether to follow the US’s lead, per Nikkei Asia. 

Mentioned publications

  1. The Return of Export Controls – Chad P. Bown, Foreign Affairs, January 24, 2023
    Export controls can only be successful if everyone is on board.
  2. The Cold War scandal over export controls – Chad P. Bown, Trade Trends (Podcast), January 29, 2023
    Lessons from Cold War export control history inform today’s applications against Russia and China.
  3. US, Netherlands strike deal on blocking chip exports to China – Pieter Haeck, Brendan Bordelon and Mark Scott, Politico, January 27, 2023
    The US has successfully negotiated an export controls pact with the Netherlands.
  4. Japan weighs China chip export curbs at U.S. request – Masaya Kato, Nikkei Asia, January 29, 2023
    Japan considers joining US export restrictions on China.

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Will the US write global rules for digital trade? 

What stands in the way of US leadership in digital trade? The Center for Strategic and International Studies analyzes what the US needs to do to develop effective digital trade rules through the Indo-Pacific Economic Framework.  Can economies friend-shore when it comes to digital trade? Advocates for friend-shoring have not reckoned with digital trade, argues Hector Torres in the Financial Times. 

Mentioned publications

  1. Domestic Perspectives on IPEF’s Digital Economy Component – Aidan Arasasingham, Emily Benson, Matthew P. Goodman, and William Alan Reinsch, Center for Strategic and International Studies, January 26, 2023
    The US can become a leader in digital trade rules but must get its own house in order first.
  2. Advocates for friendshoring have not reckoned with digital trade – Hector Torres, Op-ed: Financial Times, January 26, 2023
    How can economies implement friend-shoring in digital trade?

The real problem with the international trade system

Are we missing the bigger picture about current trade flows when we talk about protectionism?  Michael Pettis of the Carnegie Endowment for International Peace argues that the Economist is mistaken. 

Mentioned publications

  1. Fighting Global Protection: Why the Economist is Mistaken – Michael Pettis, Carnegie Endowment for International Peace, January 18, 2023
    The global trade and capital system of the past few decades might be the most unbalanced and protectionist.

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