America wants cheap EVs, unless they come from China
Plus, we do the numbers on ATM codes and hurricane season in this week's Make Me Smart newsletter.
Tariff déja vu. President Joe Biden announced new tariffs on $18 billion worth of imports from China this week, including electric vehicles, solar cells and semiconductors. The White House accused Beijing of unfairly subsidizing manufacturing and dumping underpriced goods into international markets. This move will ratchet up tariffs imposed by former President Donald Trump, and in the case of EVs, quadruples them.
What do tariffs do? They disincentivize importing foreign goods and encourage consumers to buy American instead. That should, in theory, protect American jobs and industries from getting undercut by artificially low prices. But economists will tell you that tariffs are “a tax on consumers” because businesses typically pass added import costs on to them. Treasury Secretary Janet Yellen said recently that when Trump imposed tariffs on $300 billion in Chinese imports, on balance the levies harmed rather than helped U.S. businesses and consumers. A few years later, she defends Biden’s tariffs as necessary to diversify supply chains and prevent shortageslike we saw during the early days of the COVID-19 pandemic.
Chinese EVs got a whopping 100% markup, which could keep them out of the U.S. market, at least in the short term. But if American automakers are insulated from foreign competition, they’ll have less incentive to lower prices, Marketplace’s Samantha Fields reported.
Consumers want cheap EVs, but American automakers aren’t making them. Most Western manufacturers have focused on luxury models, while Chinese electric cars are affordable for the masses. One economist told NPR that even with tariffs, some Chinese models could undercut almost every other EV for sale in the U.S., where the average model costs $56,000.
“It’s just a matter of time.” Trade experts told CNBC the protectionist policy will delay but not prevent strong sales of Chinese EVs because loopholes still allow imports of cars manufactured in other countries. Watch out, U.S. carmakers. Chinese EV company BYD plans to build a huge factory in Mexico.
Smart in a Shot
Are you a recent customer of AT&T, Bank of America, American Express or UnitedHealth? Unlucky you. All of these companies reported that their customer data has been compromised since the start of the year, and data breaches are on the rise. When your passwords are leaked, it’s time to turn on multifactor authentication and reset those PINs. Just don’t make them too obvious.
When Data Genetics and Information Is Beautiful analyzed 3.4 million PIN codes collected from data breaches, they found 11% of people used “1234” and another 6% used “1111.” Bad actors would be able to successfully guess almost 27% of all codes by simply trying the 20 most common combinations. The data behind this chart dates back to 2012, but more recent data breaches show that people are still choosing the same predictable combos.
“Shoulder thieves” exploit the fact that nearly half of people use the same PIN to unlock their phone and their financial accounts. While changing your passwords to something more complex may be a pain, inaction could cost you. More than 1 million passwords are stolen every week, and the Federal Trade Commission reports that U.S. consumers lost more than $10 billion to fraud last year.
The Numbers
Forecasts say this hurricane season will be destructive and costly, as climate change makes Atlantic storms larger and stronger on average. Let’s do the numbers.
23
Colorado State University’s Tropical Weather & Climate Research team forecasts 23 named storms this year, 11 of which are expected to be hurricanes, five of which are expected to be Category 3 or higher. That would make 2024 the third most active hurricane season on record. The 1991 to 2020 seasons averaged 14 named storms and 7 hurricanes. We’ll get more data when the government’s hurricane forecast comes out next week.
62%
That’s the probability of major hurricanes making landfall for the entire U.S. coastline this year, per CSU’s forecast. On the East Coast, there’s a 34% chance. And for the Gulf Coast, it’s 42%.
52%
That’s the chance the U.S. will see more than $10 billion in normalized losses during a La Niña year, says Philip Klotzbach, a senior research scientist at CSU’s department of Atmospheric Science. During El Niño years, the odds drop to just 10%. Forecasters expect a La Niña this summer, which along with warmer water temperatures, raises the risk of major hurricanes developing and hitting U.S. coastlines.
$3.6 billion
That’s the estimated cost of damage caused by Hurricane Idalia last year. In a separate report, Moody’s estimated damage could cost as much as $5 billion. There were 28 storms and weather-related disasters in the U.S. last year that caused $1 billion or more in estimated damage apiece, more than $94 billion altogether.
$6,366
The average homeowners insurance premium in Florida costs $6,366 a year, about three times the national average of $2,153. Last year, Florida residents saw a 40% spike in insurance premium prices. Nationwide, more than 80% of homeowners saw double-digit hikes. Climate change is making natural disasters more common in the U.S., leading to bigger losses for insurers. In response, many private insurers are now leaving high-risk areas. This forces state-run insurers to step in and cover losses, often leading them to raise premiums. Private insurers who choose to stay may also hike their rates.
June 1
The official start of hurricane season. In the meantime, if you live in a storm-prone area, experts say to start prepping your home and check to make sure your policy covers hurricane damage. Don’t put this off, as many insurers stop issuing policies or allowing changes once a storm is expected.
None of Us Is as Smart as All of Us
Tell us what’s making you smarter at smarter@marketplace.org. We’d love to include your recommendation in a future newsletter.
Living purgatory
Host Kimberly Adams is reading a New Yorker article about how extracorporeal membrane oxygenation, or ECMO, is redefining death. Medical technology can keep a patient alive by performing the work of the heart and lungs outside the body, but it confines patients to the hospital forever.
Small market, big draw
Producer Jordan Mangi is reading a Front Office Sports rundown of Caitlin Clark’s WNBA debutin a suburban Connecticut community that’s obsessed with basketball.
When labor laws don’t apply
Producer Ariana Rosas is reading an Associated Press story about nannies and housekeepers, occupations that are excluded from many federal workplace protections, who are fighting back against abuse and advocating for better working conditions. (After reading, revisit this 2018 “Make Me Smart” episode about the challenges domestic workers face on the job.)