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Panasonic Energy Aims to Cut China Supply for U.S. EV Battery Business Amid Tariff Concerns

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Panasonic Energy, a key supplier of electric vehicle (EV) batteries to Tesla and other automakers, has set its top priority to eliminate its reliance on China for U.S.-made batteries, according to a senior executive. Allan Swan, President of Panasonic Energy of North America, told Reuters that adjusting the company’s supply chain is its “No.1 objective” in response to the incoming policies of U.S. President-elect Donald Trump, who has pledged to impose significant tariffs on imported goods, including a 60% tariff on Chinese products.

Panasonic Energy, a subsidiary of Japanese electronics giant Panasonic, currently relies on some Chinese suppliers, though Swan emphasized that the company is working towards reducing this dependence. “We do have some Chinese supply, but we don’t have a lot, and we plan to have even less going forward,” Swan stated. The shift is being accelerated by the potential tariffs and is part of Panasonic’s broader strategy to strengthen its American supply chain.

The raw materials used in Panasonic Energy’s U.S.-manufactured batteries primarily come from international suppliers, including those based in Canada. In response to President Trump’s transition team’s recommendation to impose tariffs on battery materials, Panasonic is taking a “three-pronged approach” to modify its supply chain. This includes securing more U.S. suppliers, supporting Japanese and Korean suppliers to set up operations in the U.S., and collaborating with existing suppliers already planning U.S.-based operations.

Swan emphasized that Panasonic Energy’s focus is on building a robust domestic supply chain to meet U.S. production targets. The company operates a factory in Nevada and plans to open another in Kansas later this year. These efforts are part of Panasonic’s broader goal of aligning with U.S. trade policies and increasing local production as the U.S. shifts toward greater protectionism.

Japanese firms, including major automakers like Nissan and Honda, are bracing for the potential impacts of U.S. tariffs, particularly those targeting Mexico, a key low-cost production hub for the American market. Heavy machinery company Komatsu has also voiced concerns about the potential trade disruptions between the U.S. and Canada.

 

Biden’s Late Moves on China, Russia, AI May Mostly Boost Trump

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As President Joe Biden nears the end of his term, his administration has ramped up a series of foreign policy actions aimed at challenging China and Russia while promoting advances in artificial intelligence (AI). These last-minute measures include imposing new sanctions on Russian oil producers, restricting semiconductor chip exports, and addressing Chinese shipbuilding practices, among others. However, some analysts and political strategists believe that these efforts might inadvertently strengthen the incoming Trump administration, giving it fresh leverage in future negotiations.

Biden’s Final Measures and Their Potential Impact on Trump

In a flurry of activity, Biden’s team has worked to implement significant policies just before the presidential transition. Among these, the administration has sanctioned Russian oil producers and shipping companies, restricted Chinese access to high-tech semiconductor chips, and even laid the groundwork for AI centers on federal land. Despite these moves, critics argue that Biden’s actions may ultimately benefit Donald Trump, who is set to assume office in January.

Biden’s actions may help Trump fulfill key campaign promises, such as raising tariffs on China, enhancing sanctions on Russia, and taking a more aggressive stance in foreign policy. Robert Rowland, a professor of presidential rhetoric at the University of Kansas, remarked that Biden’s push to shape his legacy in the final days may give Trump a head start. Rowland noted, “If Biden wanted to burnish his legacy, he should have been doing these things a year ago. It’s too late now.”

Strategic Actions in China and Russia

One of the key actions taken by the Biden administration was an investigation into Chinese shipbuilding practices, which concluded that Beijing’s support for its shipbuilders, forced technology transfers, and intellectual property theft put U.S. companies at a disadvantage. While Biden may take credit for addressing these issues, the findings also create a legal basis for Trump to impose higher tariffs on China, fulfilling his trade-related promises.

Similarly, Biden’s new sanctions on Russian oil, intended to provide leverage in peace negotiations, could give Trump an advantage. While the Biden administration has framed the sanctions as a way to strengthen the U.S.’s negotiating position in Ukraine, Trump’s team may be able to use this economic pressure to demand a more favorable deal with Russia. This could also place Trump in a position to manage potential political fallout, including rising oil prices and gasoline costs in the U.S., a consequence that Biden officials are hoping won’t negatively impact American consumers too severely.

Biden’s Coordination with Trump’s Transition Team

Despite political tensions, Biden’s team has made efforts to ensure a smooth transition by briefing Trump’s team on ongoing matters, including Russian sanctions, AI controls, and cyber-espionage. National security adviser Jake Sullivan has indicated that the Biden administration’s recent actions have been aimed at ensuring that Trump’s team has tools to work with once they take office. This approach appears to be part of a broader strategy by Biden’s team to set up the incoming administration for success while minimizing potential conflicts.

Long-Term Political Implications

Though Biden’s policies may be aimed at reinforcing his legacy, they may end up providing Trump with opportunities to capitalize on the situation in ways that benefit his administration’s objectives. With just days left in his presidency, Biden’s final moves may be reshaping the strategic landscape, but they may also end up strengthening Trump’s political standing on the global stage.

Trump’s Return Could Boost Asian Markets, Particularly in China and Japan

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As President Donald Trump returns to office, Asian markets, including China, appear poised for resilience, with investors optimistic that the region’s economy can withstand potential tariffs and trade tensions better than Europe. While European sectors like automotive and renewables experienced declines, Asia’s financial markets displayed steadiness, underscoring confidence in the region’s ability to adapt to Trump’s trade policies.

Analysts note that Asia’s supply chains and export markets are structurally better equipped to navigate protectionist policies. China, in particular, is expected to counterbalance any potential external pressures by bolstering domestic demand, while India’s robust growth continues to attract investment. Japan’s financial markets also showed steady activity, with significant buying in industrial and financial sectors. Shinji Ogawa, co-head of Japan cash equities sales at J.P. Morgan in Tokyo, highlighted this investor confidence, attributing it to Japan’s anticipated interest rate hikes and economic measures expected from an upcoming policy meeting in China.

Historically, Trump’s trade policies led investors to favor U.S. equities, drawing funds from Asian markets, especially Hong Kong. However, those with diversified portfolios are now retaining their Asia investments. Ken Peng, head of Asia investment strategy at Citi Wealth in Hong Kong, believes that current economic conditions will likely sustain growth-focused investments in Asia, particularly in India, where economic momentum remains strong.

In Japan, stocks for automakers, banks, and capital expenditure-sensitive heavy machinery companies surged, indicating investor preference for industries set to benefit from renewed investment. In Vietnam, anticipation of expanded manufacturing boosted shares in companies such as Becamex, a key industrial park operator, while Kinh Bac City, which has a business relationship with Trump’s private conglomerate, also saw gains.

China’s Better Preparedness for Trade Tensions

During Trump’s first term, China faced significant economic strain from trade tensions, which impacted both growth and the yuan. This time, however, investors believe China is more prepared for Trump’s policies. Charles Wang, chairman of Shenzhen Dragon Pacific Capital Management, pointed out that China is now better equipped both economically and technologically to handle trade challenges.

Wang has taken a cautious approach, divesting from Chinese auto parts companies due to anticipated tariff impacts, but he remains invested in China’s property sector, expecting that the government will support it regardless of trade conditions. Further, China’s strategic pivot toward domestic demand has reduced the U.S.’s share in China’s export market, minimizing direct trade risks and potentially encouraging more supportive domestic policies. According to Dong Baozhen, chairman of Beijing-based asset manager Lingtong Shengtai, heightened tariffs may reinforce China’s focus on internal demand, fostering policies that encourage local economic growth.

Capital Flows and Potential Opportunities

Despite recent fluctuations in the yuan, foreign long-only funds purchased $11.1 billion in Chinese equities through October, according to Morgan Stanley, with outflows remaining limited. Investors anticipate that Beijing will soon unveil a stimulus package, providing further stability.

Trump’s proposed domestic tax cuts may also benefit Asian markets indirectly, potentially boosting demand for Chinese goods. Some analysts see Trump’s isolationist policies as an opportunity for China to strengthen relations with other global markets, including Europe. Robert St Clair, head of investment strategy at Fullerton Fund Management, noted that Trump’s pragmatic approach as a businessman might lead him to manage tariff levels carefully, recognizing China’s significant role in high-value industries.

Ultimately, while challenges from U.S.-China trade dynamics remain, many investors are confident that China and broader Asian markets are better equipped to manage them, with Trump’s policies potentially opening new avenues for growth across the region.