The argument for letting Chinese EVs in

Markets are hopeful, but the fighting continues from Marketplace. I'm Subri Benishor, in for David Brancaccio. President Trump says the war with Iran could be over in a couple of weeks and plans to address the nation tonight. Pakistan and China are also trying to broker a ceasefire. The price of oil fell from a high of $119 a barrel yesterday down to $102 a barrel this morning. Stocks rallied yesterday and this morning. Meanwhile, the fighting very much continues. Bradley Saunders joins us for more. He's North America Economist at Capital Economics. Welcome. Hi, thanks for having me. So yesterday, the major stock indices here went up by the most they have in 10 months. Markets have been criticized for not taking the weight of the consequences for energy markets seriously enough and also for sort of being overly optimistic when we get deescalatory language. What do you think? Yeah, I think it's an interesting one. I think given it's not solely commentary from the Trump administration at this point, it's also from Iran. We had the Iranian president saying that Iran was ready to bring an end to the conflict also, but provided that would look for concessions in the form of guarantees there'd be no US or Israeli aggression in the future. But I think this deescalatory language, as you say, from both sides is what's given markets a bit of confidence and led to some of the growth we've seen over the past 24 hours. The price of oil went up 63% in the month of March. It has come down today compared to yesterday sharply. If there is real progress towards a ceasefire, do oil prices just keep on falling slowly from here? I think that oil price would trend downwards if we saw a ceasefire, given that some of the price in the price is a risk premium, which would shrink. Wherever it would return to pre-war levels is another matter entirely, and that depends a lot on the fortunes for ships in the strait of formuse that will create knock-on effects. Is there not, though, a decent amount of damage to oil infrastructure around the Gulf that's going to take a while to fix? How long do oil supply chains take to repair themselves? There has been some energy infrastructure damage, as you say. I think most of the damage has come in natural gas in particular, but it is the case that a lot of oil extraction and refining infrastructure in the area was closed as a safety measure, and that will still take time to come back online. There's also the Babam Endab Strait, where the Houtis have been striking that potentially another bottleneck. Bradley Saunders, North America Economist at Capital Economics. Thank you, as always. Thanks very much. Let's have a look at the oil accumulation process. Let's have a look at the oil accumulation process. Chinese electric vehicle maker BYD told analysts it is confident it can sell one and a half million vehicles outside of China this year. That's about what Tesla has forecast to sell globally. These EVs are advanced, they are affordable, and that has made them increasingly popular in the global auto market. Countries that were uneasy about letting the cars into their markets are starting to come around. That cannot be said, though, for the US. America is still effectively shutting out Chinese EVs with a 100% tariff. This is in part to protect the American auto industry. There is, though, a case for letting the Chinese EVs in, and economist and writer Noah Smith makes that case and joins us to talk about it. Hi, Noah. Hey. Chinese manufacturing has gutted one US industry after another, starting with the low tech, and over the years, the competition is becoming more and more high tech. There was apparel, then magnets, where earths, solar panels. Why expose US automakers to that competition when it has gone so badly for so many other industries? The reason is basically that our own automakers have decided that electric cars are not the future, and they're not going to make them. The rest of the world is shifting to electric cars. Therefore, this is killing battery demand. Now, batteries are increasingly important in manufacturing everything. Batteries are taking over in robots, of course, all kinds of appliances, all kinds of installed machinery, storage, data centers have huge batteries to smooth out electricity use. So basically, we need more demand for batteries. I want American industry to be able to make cutting edge stuff with good technology that really works. The only way we're going to do that is if we make batteries, batteries, batteries. Chinese electric cars use batteries, and therefore, battery factories will go up and up and up all over America if you have the demand locally from the Chinese electric car companies. It's not necessarily about protecting the US auto industry. It's about creating a bunch of other industries like batteries that would benefit. That's exactly right. The idea is that physical technologies are converging toward a basic package of things. You have energy from a battery. You have control from chips. You have also some other kinds of chips called power electronics that help you move the power around the thing. And then you have motion from a motor. Everything is converging on this one tech stack, one unified tech stack. Basically, we need that tech stack, trying to preserve this sort of antiquated combustion car tech stack as this tiny little orphaned thing cut off from the rest of manufacturing is not going to help us manufacturing. It's going to hurt it. What does the US economy as a whole stand to lose if we do not let the Chinese cars in? The answer is manufacturing industries of the future. We're purposefully sticking ourselves in the past with these combustion cars that are an obsolete technology. And if we cut ourselves off from the technology of the future, which are EVs, we will be behind in physical technologies. We will be behind in manufacturing. Protecting an obsolete technology and keeping out an advanced technology is bad for your manufacturing ecosystem. Noah Smith, economist, writer, author over at the No Opinion blog. Thank you so much. Thanks for having me on. In New York, I'm Sabri Beneshore with the Marketplace Morning Report. From APM American Public Media. I'm Rima Grace, and this week on my podcast, This is Uncomfortable, we're looking at the rise of prediction markets, where you can bet on everything from sports and pop culture to political headlines, a multi-billion dollar industry that's growing at a time when more Americans are questioning the traditional paths to wealth. I feel like the quote unquote American dream is sort of breaking down. How could I possibly buy a home, be able to afford having a family? And then they're also going online and seeing people that are claiming to make all this money doing these alternative paths to wealth. Be sure to listen to this week's episode of This is Uncomfortable on your favorite podcast app.