The European Commission has announced new tariffs of up to 38.1 percent on electric vehicles (EVs) imported from China, a decision that has stirred apprehension regarding the future of trade relations between the European Union (EU) and China. Set to take effect in July, this move targets major Chinese EV manufacturers such as BYD, Geely, and SAIC, imposing tariffs of 17.4 percent, 20 percent, and 38.1 percent respectively.
Currently, the EU levies a 10 percent tariff on all car imports. The substantial increase aims to safeguard industries and jobs within the bloc. However, critics argue that this could further strain the already delicate trade relationship with China, potentially impacting economic activities in one of the world’s largest market areas.
China holds the position as the world’s largest automobile market, and the EU’s latest policy may inadvertently exacerbate challenges within its own EV sector, which is grappling with declining domestic demand. According to a study by the Kiel Institute for the World Economy, a 20 percent tariff on Chinese EVs could lead to a significant $3.8 billion decrease in EU EV imports, representing nearly 25 percent of the current trade value.
Trade and investment have long been the cornerstone of China-EU relations, fostering growth and employment across both regions. Together, China and the EU account for over a third of global GDP and trade goods worth over $800 billion annually. While China’s leading export to the EU is telecom equipment, the EU’s primary export to China is automobiles.
For European automotive enterprises, access to China’s vast and competitive EV market is crucial. Not only does it offer lucrative opportunities, but it also encourages innovation and enhances product quality through healthy competition. The increased tariffs could hinder this access, threatening the interests of EU businesses.
While the EU justifies the tariffs as a protective measure for its industries and workforce, there are concerns about long-term repercussions. Economists suggest that such tariffs may ultimately erode the global competitiveness of EU enterprises in the EV sector. Instead of protectionism, fostering open trade relations may better serve both economies, promoting growth and innovation in the rapidly evolving global EV market.
Reference(s):
cgtn.com
