Saturday, November 9, 2024

Europe braced for China’s response to electric car tariffs as trade war looms

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The proposed electric car tariffs, which vary between 17.4% and 38.1% depending on the manufacturer, would be in addition to an existing 10% tariff on vehicles

Visitors take a look at the China made BYD ATTO 3 at the 2023 Munich Motor Show in Germany(Copyright 2019 The Associated Press. All rights reserved)

Europe’s move to place tariffs on China-produced electric vehicles, is causing speculation on if and how China will retaliate.

There are concerns as to whether Beijing will hit back at European brands such as Germany’s BMW and Mercedes with tariffs in response or if agricultural products and luxury goods from Italy and France will come under fire. Experts have warned of a burgeoning trade war which could lead to increased prices for consumers while also causing harm to exporters and their employees across the globe.




Both regions, China, with its flourishing economy inclusive of over a billion residents, and Europe with its relatively affluent population of more than 400-million, are significant markets for each other. “It’s a little bit like seeing a slow motion traffic accident unfolding,” opined Jens Eskelund, the president of the European Chamber of Commerce in China. “The accident has not happened yet and … it is still possible to find an off-ramp. It is getting urgent.”

The Chinese authorities have asserted that they would employ “all necessary measures” in an effort to preserve the rights and interests of Chinese businesses. “China reserves the right to file complaints to the World Trade Organization,” declared He Yadong, a spokesperson for the Commerce Ministry, calling on the EU to “correct its wrong practices.”

In January, China sent a warning by initiating an anti-dumping investigation into European brandy exports, including French cognac. France was a key advocate of the European Union probe that led to Wednesday’s announcement of tariffs on electric vehicles (EVs).

The EU is also scrutinising subsidies given to Chinese wind and solar companies, as well as potential unfair market restrictions for medical devices – a longstanding grievance of European manufacturers. The European Union has stated it reached out to China to discuss the EV investigation findings, warning that tariffs would be implemented on July 4 if no resolution is found. These tariffs would be temporary and only finalised after four months.

China’s state-run Global Times newspaper reported that Chinese firms are planning to request the government to initiate an anti-dumping investigation into certain EU pork products and a subsidy investigation into some dairy products. The commerce ministry spokesperson, He, stated that any applications for investigations would be reviewed and a case initiated if the criteria were met.

The Global Times also cited a prominent Chinese auto industry expert advocating for an increase in tariffs on imported vehicles with larger engines to reduce carbon emissions, a move that could impact high-end German exports from Mercedes and BMW.

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