Press
The EU and China want to negotiate with each other in the dispute over e-car tariffs. Many companies are against punitive tariffs anyway. And Beijing is already preparing countermeasures.
There are only a few days left until July 4th, the EU-Additional tariffs on imports of Chinese electric cars will come into force. But now both sides want to negotiate at the last minute. Chinese Trade Minister Wang Wentao and EU Trade Commissioner Valdis Dombrovskis agreed on this in a video conference at the weekend. A spokesman for the EU Commission described the talks between the two parties as “open and constructive”. However, the EU stressed that any negotiation result must be effective against harmful subsidies. Discussions will continue at all levels in the coming weeks. Economics Minister Robert Habeck (Greens) also pushed for negotiations during his visit to Beijing.
It is a partial success, because from the point of view of the economy, the aim is not to raise more and more tariffs – but to create a fair market environment. “Coercive measures are the last thing we could wish for as an export nation, Germany,” stressed the President of the Federation of German Industries (BDI), Siegfried Russwurm, on Monday (24 June) in the German RadioHe welcomed the talks as a good sign.
Many companies active in China would also like to see the tariffs overturned, at least before they come into force after a transitional phase in November. “Because we have to keep the Chinese market open, we also want to keep the European market open,” said Maximilian Butek, Managing Director of the German Chamber of Commerce (AHK) in East China. However, experts doubt that the EU procedure can be stopped quickly.
EU punitive tariffs: China’s retaliation is certain
Brussels concluded in a lengthy investigation that Chinese electric car manufacturers receive unfair subsidies – in varying amounts. Therefore, the additional tariff for China’s Electric car-Market leader BYD is “only” 17 percent, while for cars from the state-owned company SAIC – which sells electric models of the acquired British brand MG in Europe, among other things – it is a good 38 percent. This is in addition to an import duty of ten percent that the EU already imposes. China also imposes a 25 percent import duty on car imports.
If the tariffs come into force, retaliatory measures from China are certain. The government was “shocked” by what it saw as an overly meticulous investigation by the EU, which requested information from car manufacturers on topics such as the procurement of battery raw materials, component production, pricing and sales channels. Beijing has already announced its plans to fight back, initially in the form of an anti-dumping investigation into pork imports from the EU.
China and EU: Is a trade war looming?
In previous trade conflicts, Beijing has always targeted goods that it could obtain elsewhere or that are not essential – but for whose exporters China is an important market. In other words, the damage to Chinese consumers would be small, but the damage to manufacturers would be high. Trade restrictions should also always look as if Beijing were imposing them because of violations of the rules of the World Trade Organization (WTO). This was the case, for example, with sanctions on Australian wine, wood and barley that Beijing imposed a few years ago as a result of a political dispute.
Punitive tariffs on EU pork would currently hit Spain the hardest, as China is the second-largest market for it. Spain is the EU’s largest exporter, ahead of Denmark and the Netherlands, especially of pork parts that are spurned in Europe: necks, ears and feet. Spain, like France, had also spoken out in favor of the punitive tariffs on electric cars. Beijing has been conducting an anti-dumping investigation into French brandy since January.
Germany’s economy against special tariffs for electric car imports from China
Voices against the special tariffs came primarily from Germany. Nevertheless, Chinese reports also brought tariffs into play that would affect German car manufacturers in particular: a tax on cars with particularly large engine capacities of 2.5 liters or more. The high-horsepower luxury models produce BMW, Audi & Co are not manufactured in China, but exported from Germany. Such reports may serve to further mobilize German companies and politicians against the tariffs.
State media have also mentioned dairy products as possible targets for punitive tariffs; in addition to Germany, France, Denmark and the Netherlands would be affected. China could easily increase imports from New Zealand.
Habeck sees room for a compromise with China
Habeck saw opportunities for compromise in China. The EU tariffs are not penalties, but tariffs to compensate for unfair competitive advantages. The accusation is neither about subsidies per se nor about China’s overcapacity, the minister stressed. The problem only arises when state subsidies flow in to specifically increase export opportunities.
Brussels currently sees this as a given with electric cars. There can therefore only be movement if China is willing to compromise on subsidies. It is therefore still unclear whether a trade war can be averted. In any case, at least 55 percent of EU member states, which together represent 65 percent of the EU population, would have to vote in November to end the tariffs. China will therefore not only talk to Brussels – but will also specifically try to convince individual EU countries to vote against the tariffs.
#punitive #tariffs #Chinas #retaliation #trade #war #looming