Beijing – On Wednesday, China filed a complaint with the World Trade Organization (WTO) in response to the European Union’s decision to impose high tariffs on Chinese-made electric cars. This move, which has been met with opposition from Germany and Hungary, has raised concerns of a potential trade war between the two economic powers.
The EU announced on Tuesday that it would be implementing taxes of up to 35% on Chinese electric cars, citing evidence of state subsidies in China that were undermining European automakers. This decision has been met with strong criticism from China, with the commerce ministry stating that they do not “agree with or accept” the tariffs and will take all necessary measures to protect the rights and interests of Chinese companies.
However, the EU has defended its decision, with trade chief Valdis Dombrovskis stating that it is aimed at promoting fair market practices and supporting the European industrial base. He emphasized that while competition is welcomed, it must be based on fairness and a level playing field.
Despite the majority of EU member states opposing the tariffs, they were still implemented after being published in the EU’s official journal on Tuesday. The tariffs will last for five years and will also apply to Chinese-made vehicles produced by foreign companies, such as Tesla, at varying rates.
The decision to impose these tariffs has sparked concerns of a potential trade conflict, with Germany’s main auto industry association warning of the risks involved. Meanwhile, a Chinese trade group has criticized the “politically motivated” decision and urged for dialogue between the two sides.
The EU launched the investigation in an effort to protect its automotive industry, which employs around 14 million people. France, who pushed for the probe, has welcomed the decision as a crucial step in protecting trade interests, particularly during a time when the industry is in need of support.
However, some of Europe’s biggest carmakers, including Volkswagen, have shown their discontent with the EU’s approach and have urged for talks to be held to resolve the issue. The German Association of the Automotive Industry’s president, Hildegard Mueller, said the extra tariffs are a setback for free global trade and will not benefit the competitiveness of the European automotive industry.
This news comes at a tough time for Volkswagen, as the company recently announced plans to shut down at least three factories in Germany and cut tens of thousands of jobs. The ongoing discussions between the EU and China have been focused on finding a solution that would address the issue of subsidies in China, potentially through the implementation of minimum prices.
The EU has stated that the tariffs can be lifted if a satisfactory agreement is reached, but talks have been hindered by differences between the two parties. The Chinese Chamber of Commerce to the EU has urged for the talks to be accelerated in order to establish minimum prices and ultimately eliminate the tariffs.
However, the EU may be faced with retaliatory actions from China, as they have already announced plans to impose provisional tariffs on European brandy. Beijing has also launched investigations into EU subsidies for certain dairy and pork products imported into China.
Trade tensions between China and the EU are not limited to the electric car industry, as Brussels is also investigating Chinese subsidies for solar panels and wind turbines. It is worth noting that the EU is not alone in imposing heavy tariffs on Chinese electric cars, as Canada and the United States have also implemented higher tariffs of 100% in recent months.
It remains to be seen how this dispute will be resolved, as both sides continue to hold their ground. However, it is important for both parties to come to a beneficial and fair agreement through dialogue and cooperation, as a trade war would only harm both economies. Let us hope that a resolution can be reached soon to promote healthy competition and support the growth of the global automotive industry.
