Trade relations|Germany, which voted against import tariffs, has already painted the threat of a trade war between the EU and China. A researcher at the Foreign Policy Institute doubts that the import tariffs would still be enough to trigger a trade war.
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The EU decided to impose import duties on Chinese electric cars for five years.
Ten member countries voted for, five against and twelve abstained.
The tariffs are based on the commission’s investigation into China’s government subsidies for electric car production.
The CEO of Autotuojat ja -teollisuus ry does not believe that the import duties imposed on Chinese electric cars will affect the prices of electric cars.
EK’s head of trade policy characterizes the EU’s decision as being in line with “justice thinking”.
The EU was divided quite strongly when its member countries decided on Friday on imposing import duties on Chinese electric cars for the next five years.
Ten member countries voted in favor of import duties on Chinese electric cars. Five member states voted against them. Twelve member states abstained.
The EU decided on the imposition of import duties based on a report by the Commission, according to which the Chinese state supports the manufacture of electric cars in many ways throughout the supply chain. From the Commission’s point of view, Chinese subsidies not only distort competition in the electric car market, but can also cause financial damage to European electric car producers.
In the future, Chinese electric cars will be subject to a penalty duty of 17–38 percent, depending on the brand, which will come on top of the current ten percent import duty.
Immediately after the decision, speculation began about how China would react to the import duties. Among other things, Germany, which voted against tariffs, already raised the threat of a trade war between the EU and China. The same message was also circulated by the German automotive industry.
Could import tariffs on Chinese electric cars really fuel wider trade policy tensions between the EU and China?
Business life head of trade policy of the Confederation (EC). Timo Vuori characterizes the EU’s decision as being in accordance with the “rights sense of thinking”.
“The EU Commission has assured that they have evidence of unhealthy competition and abuse of state subsidies. If the evidence is clear, then it is justified to use countervailing duties permitted by international trade and international trade law.”
Vuori estimates that the decision will primarily slow down the electrification of motoring in Finland and elsewhere in Europe.
“From the consumer’s point of view, the electric car market may weaken due to import duties.”
He also says that he especially understands the fears of companies that China will react to the tariffs by limiting the import of raw materials from China to Europe and, accordingly, by imposing punitive tariffs on food products exported from Europe to China.
“Companies are afraid of escalating trade tensions due to import duties. Yes, this is a kind of dancing on a tightrope from the EU.”
Car importers and -teollisuus ry’s CEO Tero Kallio does not believe that the import duties imposed on Chinese electric cars will directly affect the prices of electric cars.
“Of course, I can’t promise that prices won’t rise. However, the electric car market has quite a lot of supply from European, American and Japanese manufacturers. So there is competition on the market, which forces manufacturers to keep the prices of electric cars competitive.”
Kallio points out that import duties are not only about consumers. Cars are also exported from Europe to China. For example, German car manufacturers’ stubborn attitude towards import duties is partly explained by the fact that their about 30 percent of sales come from China.
“China can take countermeasures with import duties. European car brands may be worried that China is starting to make it difficult for them to operate in the country. China may begin to make it more difficult for other European products to be exported to the country as well.”
Foreign policy a researcher at the institute Liisa Kauppila doubts that the import tariffs would still be enough to fuel a trade war between the EU and China.
“A single event like this is unlikely to lead to a trade war. If we look at the matter in the global picture, the trade war between the US-led world and China can be said to be already underway. Canada and the United States have imposed import duties on Chinese products, and Japan has been pressured to do so.”
Kauppila is also skeptical that China would immediately be ready to move from words to radical actions comparable to the EU’s import duties. The country may threaten with drastic countermeasures, but it is a different matter whether it finally implements them as strongly.
“The rhetoric from China is often harsh. However, this does not mean that the actions will be as hard,” says Kauppila.
“After the start of the United States by former President Donald Trump’s in the lead up to the trade war with China, Chinese wolf warrior-diplomats rampaged around the world. However, the countermeasures implemented by the Chinese government were quite moderate.”
of the EU Commission chairman Ursula von der Leyen defended the EU’s decision on Friday, stressing that the electric vehicle industry is important for Europe’s competitiveness and green industry leadership.
“EU car manufacturers and [sähköautoteollisuuteen] the related sectors are investing and innovating already now so that they could fully develop their competitiveness. Therefore, the EU should act decisively if we see indications that market distortions and unfair competition are hindering their efforts.”
According to Kauppila, the import duties imposed on Chinese electric cars can be seen as a strong statement from the EU in favor of “strategic autonomy”.
“China’s state-supported electric car production has been considered a threat to the development of Europe’s own electric car production. In the long term, it is hoped that own production will reduce Europe’s dependence on China and thus also reduce the geopolitical risks of the green transition.”
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