Mergers, Tariffs, and More!
Editor’s Note: Happy Wednesday, dear reader!
Let’s get to it.
Canada Imposes 100% Tariff on Chinese EVs
Canada has joined the U.S. in imposing a 100% tariff on the importation of Chinese-made electric vehicles (EVs).
Our neighbor to the north will also impose a 25% tariff on steel and aluminum from the Red Dragon.
The decision was made following a meeting between U.S. national security advisor Jake Sullivan and Canada’s prime minister, Justin Trudeau, along with his cabinet ministers.
“Actors like China have chosen to give themselves an unfair advantage in the global marketplace,” Trudeau said.
Next week, Sullivan will travel to Beijing and will likely discuss the new North American tariffs with his counterparts there.
“The U.S. does believe that a united front, a coordinated approach on these issues benefits all of us,” Sullivan said over the weekend.
“We’re doing it in alignment, in parallel, with other economies around the world that recognize that this is a challenge that we are all facing,” Trudeau said. “Unless we want to get to a race to the bottom, we have to stand up.”
The Biden administration has stressed that because China dishes out subsidies for manufacturing EVs and other items, businesses don’t need to profit. As a result, they have an unfair advantage against their global competitors.
For example, thanks to the subsidies, Chinese EV makers can afford to sell cars for as little as $12,000. No North American car company can afford to sell EVs for that cheap.
U.S. Companies Say ‘No’ to Chinese Import Tariffs
This week, the White House is expected to announce its plans to implement these steep tariffs on Chinese imports.
However, U.S. companies and even local governments are calling for these tariffs to be softened.
That’s because the tariffs would drive up the prices of their own orders for goods from China.
Recently, the Port of New York and New Jersey argued that the proposed 25% tariff on Chinese-made cranes — for which there are no U.S. competitors — would cause “a significant strain on the port’s critical and limited resources.”
Politicians from Virginia and Georgia have raised similar concerns about the impact these new tariffs could have on their own port operations.
In addition, Ford Motor (NYSE: F) has urged that a proposed tariff on artificial graphite, which is critical to the production of EV batteries, be reduced. And the Augos Drive America group has naked for the government to keep tariff rates on EV components critical through at least 2027 in order to allow carmakers to “fulfill investments in U.S. production and to bolster consumer adoption” of electric vehicles.
The Supermarket Merger Trial Is Underway
This week, a district court in Oregon is tasked with determining whether the largest supermarket merger in the history of the U.S. can move forward.
For nearly two years, Kroger (NYSE: KR) and Albertsons (NYSE: ACI) have planned to merge in a deal worth $24.6 billion.
The supermarket companies contend that the merger would let them better compete with rivals such as discount grocers, online stores, dollar stores, and warehouse retailers.
However, the U.S. Federal Trade Commission — along with eight states and the District of Columbia — have sued for the deal to be blocked.
Critics of the merger argue that the deal would reduce competition and lead to higher grocery prices for U.S. households.
After all, the two companies have each grown to gargantuan size through M&A (merger and acquisition) activity already.
In addition to its namesake grocery chain, Kroger owns Fred Keyer, Harris Teeter, King Soopers, Mariano’s, QFC, and Ralphs. Meanwhile, Albertsons also owns Carrs, Haggen, Pavilions, Safeway, and Vons.
However, the two companies contend that the merger would help lower grocery prices. They say that Kroger’s chains already have lower prices than the Albertsons-owned stores. Apparently, they plan to immediately lower prices at Albertsons prices as a first order of business. In addition, Kroger argues that it has invested more than $5 billion into lower prices at its stores over the past 20 years and operates on a very narrow profit margin.
They also argue that the country’s mega-retailers — including Amazon (NSDQ: AMZN), Costco (NSDQ: COST), and Walmart (NYSE: WMT) have more control over prices. These chains are able to use their size to negotiate lower wholesale prices… yet charge shoppers higher prices anyway.
Last year, Walmart — the largest food seller in the country — realized roughly $324 billion in grocery sales. That’s about one-third of the U.S. market.
However, Kroger came in second place, with $113 billion in revenue. Meanwhile, Albertsons raked in sales of $65 billion — the same amount as Amazon, which owns Amazon Fresh, as well as Whole Foods.
The court has two weeks to decide whether to allow the merger to move ahead.
If the deal goes through, the two chains will sell a collective 576 stores in 18 states and the District of Columbia to C&S Wholesale, which owns the Piggly Wiggly and Grand Union supermarket chains.
Americans Aren’t Loyal to Car Brands
A recent Statista Consumer Insights survey showed that nearly half of Americans said they were either “likely” or “very likely” to buy a car from a different brand at the next possible occasion.
Consumers are more likely to be loyal to the maker of their smartphone, primary bank, or internet provider.
However, the same survey showed that 86% of respondents said they were either “satisfied” or “very satisfied” with their current car make — indicating that the desire to be disloyal is related more to wanting to try a different make of car than due to dissatisfaction.
Take a look:
You will find more infographics at Statista
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