Summary
- European Union imposed tariffs on Chinese electric vehicles
- Beijing is expected to retaliate for the trade dispute
- EU member states voted on the tariffs, with 10 in favor, 5 against, and 12 abstaining
- Chinese Ministry of Commerce vows to safeguard interests of Chinese companies
- Negotiations between Brussels and Beijing to find alternative to tariffs, but reaching agreement may be unlikely
Article
The European Union’s decision to impose tariffs on Chinese electric vehicles has raised concerns about how and when Beijing will retaliate in the ongoing trade dispute between the two parties. While talks continue, the votes cast by individual EU member states on the EV measures last week may provide clues as to how China will respond. China has previously threatened tariffs on EU brandy imports and initiated investigations into pork and dairy products, signaling a range of options for potential retaliation.
The votes on the tariffs last week saw 10 member states in favor, five against, and 12 abstaining. This decision has led to the Chinese Ministry of Commerce expressing concern over the impact on Chinese enterprises investing in Europe and vowing to take measures to protect their interests. Countries that voted in favor of the tariffs are likely to face scrutiny from Chinese investors, while those that opposed the measures may receive more investment and face fewer challenges in China.
Pork and dairy are among the sectors most vulnerable to China’s potential response. An anti-dumping probe into EU pork imports initiated by Beijing could significantly impact major suppliers like Spain, Denmark, and the Netherlands. The dairy sector, with key EU suppliers including the Netherlands, France, and Ireland, is also at risk. Additionally, French cognac producers will be monitoring the situation closely as Beijing had previously launched a probe into EU brandy imports.
The threat of further retaliation from China includes the possibility of imposing tariffs on imported cars with large engines, which would primarily affect Germany and Slovakia. German automakers have expressed concerns about potential retaliation from Beijing, highlighting the impact on brands such as Audi, Porsche, and Lamborghini. Negotiations between Brussels and Beijing are ongoing to find alternatives to the tariffs, including exploring a mechanism to control export prices and volumes.
China has warned that the EU could lose investment from Chinese EV companies and miss the opportunity to transform its own car industry if the tariffs are implemented. Both parties are set to hold new negotiations on Oct. 7, with Chinese state media emphasizing the need for Europe to demonstrate sincerity in the talks. However, the possibility of reaching an agreement remains uncertain, with experts cautioning that if the negotiations fail, major retaliations from China could follow. As discussions continue, China is expected to offer incentives while also leveraging punitive measures to push for a resolution.
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