“A trade war is inevitable”: China responds on electric cars

© Unsplash/Christian Lue

This week, The European Union has indicated its intention to impose tariffs of up to 36.3% on imports of battery-electric vehicles made in China, following a nine-month investigation into the concluded that the Beijing government was providing large subsidies to the electric vehicle sector.

China counterattacks

The response was swift. Less than 24 hours after these announcements, the communist regime opened an anti-subsidy investigation into dairy products imported from the EU, reports Euronews. These investigations will take 12 months and may possibly be extended by six months.

They will focus on the subsidies granted by the European institution to the production of various dairy products in eight Member States (France is not one of them). These measures mainly concern the Common Agricultural Policy (CAP).

Quoted by our colleagues, the Commission spokesperson, Olof Gill, indicates that the latter “will firmly defend the interests of the EU dairy industry and the Common Agricultural Policy, and will intervene where necessary to ensure that the investigation fully complies with WTO rules on the matter.”

But beyond this case, a wider economic confrontation is looming. This is at least the view of Josep Borrell, the EU High Representative for Foreign Affairs, Josep Borrell. He thus stressed on Tuesday:

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We have no interest in embarking the world in a trade war. However, it is possible that this trade war (…) is inevitable. It is in the logic of things.

He added: “Our political systems are different, but this should not lead to systemic and permanent rivalry.”

Chinese manufacturers in difficulty

If China reacts so firmly to this European decision, it is undoubtedly because its manufacturers are heavily impacted by these protectionist measures. While the EU has already introduced a temporary surcharge on imports of Chinese electric vehicles last July, Dataforce noted a collapse in sales of 45% of these cars produced by the Empire in the middle between June and July 2024.

Same case in France where the new ecological bonus favors vehicles produced in Europe and excludes Chinese and American models. In fact, the MG4 saw its sales drop by 33% between January and July this year.

What you should remember:

• The EU announced this week tariffs of up to 36.3% on imports of battery-electric vehicles made in China
• In the wake of this, China is launching an anti-subsidy investigation into dairy products imported from the EU
• Some observers, and not the least, now fear a wider trade clash between the two blocs

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