You're making it sounds like 100% is the highest possible ceiling for a tariff, when it's a number arbitrarily set to fulfill a specific agenda and can be infinitely adjusted.

Of course if you protect your domestic car industry too much it will slowly become uncompetitive and irelevant on the international free market.

Yep, the tariffs Boeing got on Bombardier's C-Series that were the final nail in the coffin of that program and Bombardier as a serious player, and gifted a great new jet to Airbus, were 300%.

So the Chinese government is subsidizing BYD in order for them to destroy every other Chinese car manufacturer? I think the Chinese government has far less convoluted and costly schemes to control which businesses live and which die.

If I understand it correctly, your theory is like saying the US set such high tariffs and sanctions so Chinese companies adapt and get so strong they can eventually outcompete any US company and break free of any dependency.

But many of those competitors would be completely unable to operate without subsidies. Take Zhidou, which went bankrupt in 2019 after sales of EVs with range under 250 km were no longer subsidized. https://web.archive.org/web/20240926235216/https://carnewsch... They relaunched in 2024 with some help from the Lanzhou city government, offering the Zhidou Rainbow at a subsidized sales price of $3,800 to $5,500. https://web.archive.org/web/20240512094644/https://k.sina.cn...

Note that there's two different kinds of Chinese government involved here: the central government primarily wants to build up the EV industry and is mostly agnostic between manufacturers, hence the sales subsidy. Regional governments want to build up their own economy, so they give preferential treatment to companies that manufacture in their region.

So it's not, as you thought, that the central government is specifically subsidizing BYD in order for them to destroy every other Chinese car manufacturer, but that regional governments are subsidizing local competitors in order to protect them from being destroyed by BYD.

But those subsidies won't last forever, and once they run out, many manufacturers will go bankrupt (see original 2019 Zhidou bankruptcy). Once that happens, BYD will most likely be able to cement their market dominance and raise prices to finally be able to make a decent profit even on domestic sales.

Just to add some perspective. It is still cheaper than anything Detroit makes, but 10.000 USD is a bit misleading if you ignore currency policies, subsides, incentives and regulatory differentials.