China-US Trade War Sparks Global EV Industry Shakeup

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Chinese President Ji Jinping & US President Donald Trump
As US-China tensions escalate, the EV sector faces supply chain disruptions, emerging market shifts and technological challenges worldwide

As the United States and China reignited their trade war in 2025, the EV industry finds itself at the epicentre of global economic turbulence. The battle between these two economic giants, high-stakes tariffs and trade restrictions, sends shockwaves through the EV sector, creating challenges and unexpected opportunities worldwide.

Disruption of EV supply chains & emerging markets

The trade war's impact extends far beyond the borders of the US and China, severely disrupting global EV supply chains. Companies relying on Chinese manufacturing or American consumers are facing unprecedented challenges. According to S&P Global Mobility, the US has imposed a new 30% tariff on goods from mainland China, with a staggering 102.5% tariff specifically on EVs from China. The disruption forces EV manufacturers to re-evaluate their supply chain strategies, reshuffling global production networks.

As EV manufacturers seek to avoid tariffs, some emerging markets are experiencing an unexpected boom. Countries like Malaysia and Vietnam have seen many companies relocate EV production away from China. While the move presents opportunities for economic growth in these nations, it strains local infrastructure and labour markets, potentially impacting the cost and efficiency of EV production.

As the United States and China reignited their trade war in 2025, the EV industry finds itself at the epicentre of global economic turbulence. The battle between these two economic giants, high-stakes tariffs and trade restrictions, sends shockwaves through the EV sector, creating challenges and unexpected opportunities worldwide.

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Opportunities amidst challenges

Impact on EV sales and production: The trade war significantly affects global EV sales and production. S&P Global Mobility expects global light-vehicle sales to decrease by about 793,000 units in 2025, with a peak impact of 1.05 million units in 2026. The decline is primarily attributed to trade tensions and tariff impositions.

Technological dilemmas in the EV industry: The trade war is extending into the realm of EV technology, creating difficult choices for many countries and companies. The fragmentation of supply chains is complicating technology choices for EV businesses globally. The technological decoupling could lead to a more divided global EV tech landscape, potentially slowing innovation and economic growth in the sector.

Policy changes affecting EV adoption: In the US, the Trump administration's expected emissions rollbacks and fuel economy regulations are reshaping the EV market. The lowered regulatory requirements are expected to reduce the pressure to move to battery electric vehicles (BEVs) as quickly as possible. As a result, the US BEV mix is now expected to reach only about 30% by 2030, down from prior projections of 40%.

European response to Chinese EVs: The EU is considering imposing tariffs on Chinese EVs to protect its domestic EV industry. The move could significantly impact the global EV market, as the EU is China's largest overseas market for its EV industry.

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Despite the challenges, some see opportunities in the current situation. A motoring expert, Quentin Willson, suggests that tariffs encourage Chinese automakers to build European factories, potentially leading to onshore battery and EV manufacturing. Doing this could reduce emissions from importing Chinese EVs and create jobs in the European EV sector.

The US-China trade war is reshaping the global EV landscape. From disrupted supply chains and shifting manufacturing hubs to unexpected export opportunities and technological dilemmas, the EV industry is grappling with the unintended consequences of this economic showdown. As the situation evolves, EV manufacturers, suppliers, and policymakers must remain vigilant and adaptable to navigate the new global trade landscape in the EV sector.


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