The European Union and China will open talks to negotiate Brussels’ tariffs against Chinese-made electric cars.
The European Union and China are open for talks to discuss the former’s imposition of tariffs on the latter’s electric vehicles. The Global Times reported the news on Sunday, citing a video conference between China’s Commerce Ministry Wang Wentao and the EU Commission’s executive vice-president Valdis Dombrovskis.
Brussels officially imposed tariffs between 17.4% and 38.1% on Chinese-made EVs earlier this month, on top of the already-existing 10% duties. This would make some Chinese electric cars almost 50% more expensive for European consumers.
The measure is supposed to kick off on July 4th unless the two economic superpowers can find an agreement.
Chinese officials called the tariffs “blatant protectionism” and promised retaliation if actually implemented. Last week, Beijing initiated an investigation into EU subsidies for its pork industry, mirroring Brussels’ actions last year against Chinese support for EV manufacturers.
However, both sides recognize that starting a trade war would hurt everyone and benefit no one. The economies of Europe and China are closely intertwined and mutually dependent.
“The doors are open for discussions. And I hope that this message was heard,” Germany’s economy and vice-chancellor, Robert Habeck, said. Germany, one of the largest car manufacturers in the world, has the most to lose in an EU-China trade war on EVs.
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Brussels’ extra duties came a few days after the United States announced its own tariffs against Chinese products. All electric cars manufactured in China were subjected to a 100% duty, up from the previous 25%.
China pledged to retaliate against US tariffs as well, but no action has been taken yet.
Western markets are placing tariffs against Chinese EVs in fear of being overwhelmed in the future. According to the EU Commission, Beijing’s subsidies on the industry, combined with cheap local labor, make Chinese EVs far cheaper than their European peers.
Europe has one of the world’s largest car industries, one of the last remaining sectors where it hasn’t lost competitive advantage to outside competitors. Brussels is therefore extremely protective of its domestic car sector.
At the moment, Chinese exports in Europe are negligible. EV demand is extremely low and Chinese firms lack the infrastructure to produce cars for the European market.
Several Chinese brands, including the world’s largest producer of EVs BYD, pledged to open new production lines in Europe in the near future. As for demand, they hope it will rise as infrastructure for electric vehicles becomes more accessible in the continent.
Somehow counter-intuitively, European brands could be hurt by these tariffs too. China is the world’s largest market and an immense source of profit. Moreover, European car giants are quickly adapting to the new reality of electric vehicles.
All of this makes tariffs a ground for negotiation, but there is no certainty an agreement between the two economic powerhouses will be reached.
