Rush Doshi

This is deindustrial policy. We need to scale up in batteries. These carveouts, pushed by lobbyists, ensure we will depend on PRC batteries for the foreseeable future. Do we really want a rare earths problem at the heart of the electrical stack?

Mitch, I identify with the “owl” orientation. But the real “owl” perspective is not an indefinite carveout because that makes the licensing or investment or tech transfer deals you’d support less likely than final assembly deals which are bad for us. Btw, plenty of auto companies oppose the carve out, so it’s not a unified industry view. That means the practical realities aren’t all what they seem. So owl’s should oppose the carveouts!

The reason industry groups are pushing for carve-outs is straightforward: they’ve been deeply briefed on the practical realities. It seems likely that they share the same strategic objective as policymakers—reducing U.S. dependence on Chinese supply chains. Where they differ is not on the destination, but on the critical path to getting there. Their view is that the United States must first rebuild key industrial capabilities and close important technology and supply-chain gaps before it can sustainably reduce that dependence. Business strategy is like sailing. Knowing your destination isn’t enough. When the wind is against you, you don’t point the bow straight into it—you tack. Sometimes the fastest route to independence is an indirect one. 🦉

Are not cars and their software a separate issue? What's the downside of licensing superior battery tech? Who doesn't want their car charged in 10 minutes?

Hearing the markup was pushed (again) to next week, but worth watching closely. The real fight is not whether to ban the vehicles, but if the battery and component language survives intact. If the car is covered but the PRC battery inside it is not, what have we actually secured? The carve-outs are the whole game.

I can't speak for others but the point is not "does FX solve this?" but "(1) can other countries match China's industrial policy?" and "(2) can stalled industrialisation and disorderly decline in industrial activity be prevented?", and pushing for a FX adjustment is a politically minimalistic strategy for addressing these two ((whether it's a good strategy is a different question). As I've surmised myself, and I think there's good evidence: even in the absence of large subsidies, export price deflation, household demand weakness, and yuan overvaluation, it is quite possible that the answer to both (1) and (2) is still no. China's advantages in levelised costs may remain insurmountable in most sectors. Not really China's problem in that context, but a 'too big for the world' problem for almost everyone else. Which is why I think this whole framing that we have to accept one country's extensive dominance across global industrial supply chains if we want timely decarbonisation is misleading, not just because it frames the overcapacity problem as merely about green tech, but because it makes the same political error that some degrowth arguments make: assuming that sufficiently widespread political support for decarbonisation persists under conditions of industrial decline or stagnation.