2024-07-04 09:22:38
Depending on the brand, the special tariffs are to increase to up to 37.6 percent. This maximum amount has been revised down slightly since the first announcement in mid-June. The highest tariff of 37.6 percent applies to car manufacturers that did not cooperate with the EU investigation that began nine months ago. These include Volkswagen partner SAIC. The current tariff rate is ten percent. These temporary tariffs will come into force on Friday and will last for a maximum of four months.
Within this period, EU states must decide on final tariffs. Negotiations should continue until then. Exchanges between EU Trade Commissioner Valdis Dombrovskis and Chinese Trade Minister Wang Wentao have intensified in recent weeks, the EU Commission said on Thursday.
The ball is in the court of the EU countries
Germany is already opposed to introducing long-term tariffs, while France, Italy and Spain have called for a tougher approach towards China. To cancel tariffs set by the Commission, a majority of at least 15 member states, which together represent at least 65 percent of the EU’s population, is needed in the fall.
Germany has no interest in “a race between tariffs and fragmentation of markets as a result,” said German Economy Minister Robert Habeck (Greens). China, as an exporting country, is not interested in this either. In Austria, the Ministry of Economic Affairs says it is currently examining the “possible consequences” of the special tariffs.
China seems ready to negotiate
Austria and the European Union have a lot to lose in a threatened spiral of retaliation and eventually a trade conflict,” ÖVP Economy Minister Martin Kocher said in a written statement. The best option is a negotiated solution with the government in Beijing. “We have to introduce the possibility of punitive tariffs if China doesn’t take quick steps in the right direction,” Kocher said.
China appeared ready to negotiate on Thursday. There is now a four-month window, said a spokesman for China’s Ministry of Commerce: “I hope that the European and Chinese sides will contact each other, show honesty and speed up the consultation process.”
China expanded market shares in Europe
The EU accuses Beijing of unfairly subsidizing battery-powered cars and distorting competition accordingly. According to the EU Commission, Chinese electric cars are usually around 20 percent cheaper than models manufactured in the EU. Habeck previously emphasized that the measure was not a blanket punitive tariff, but a tariff to compensate for unfair competitive advantages.
In the last two years, Chinese suppliers such as BYD and SAIC have made their share of the European electric car market more than four years. According to the analysis company Jato Dynamics, it was 7.8 percent in the last quarter of last year.
Warning regarding countermeasures
The measures were intended to protect the European car industry. However, they objected to this: On the one hand, the tariff increases also affect German companies that have moved their production to China. You must expect a surcharge of almost 21 percent when importing from China. BMW, which brings cars built in China to Europe, would be particularly influential.
On the other hand, there are fears of countermeasures from China. It is not clear what this would look like in concrete terms. However, the Chinese government is already considering higher tariffs on French spirits and pork from Europe.
The car industry is expecting more expensive electric cars
The German Association of the Automotive Industry (VDA) warned of the “enormous” damage that could result from possible countermeasures from Beijing. China is the world’s largest car market and, according to the VDA, would be the third largest export market for German cars in 2023 after the US and the UK.
The association also believes that this step by the EU would not make the conditions of competition fairer, but would make it more difficult to expand electromobility and, therefore, to achieve climate goals. In addition, the anti-subsidy tariffs would make electric cars more expensive in Europe.
Study: A decrease in imports from China is expected
According to a study published on Thursday, the German Institute for the World Economy (IfW) expects imports from China to the EU to drop by 42 percent. However, he sees little long-term impact on electric car prices in Europe.
According to the researchers, a reduction in imports from China would be offset by more sales from European producers and imports from other third countries. The IfW simulated the effects of punitive tariffs together with the Institute for Economic Research (WIFO) and the Austrian Institute for Supply Chain Information (ASCII).
Economists see the move as justified
Many economists believe that the EU initiative is justified. More than two-thirds of economists surveyed by Germany’s Ifo Institute spoke in favor of finding alternative markets but against decoupling from China.
“In principle, the EU is rightly responding to China’s distorting trade practices with countervailing duties,” said Gabriel Felbermayr, head of WIFO. At the same time, the EU should do everything possible to achieve negotiation results and avoid “escalating spirals”.
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