China Takes a Measured Approach in EU Tariff Dispute
As tensions rise over tariffs on Chinese electric vehicles, industry experts believe China will avoid escalating the situation with the European Union. This comes after China filed an additional appeal with the World Trade Organization (WTO) over the EU’s tariffs on its EVs.
A Warning Shot, Not a Declaration of War
According to Shaun Rein, managing director of China Market Research, China’s move is a “warning shot” to show its strength while seeking a peaceful resolution. Rein expects China’s response to be measured, as it aims to strengthen economic ties with Europe amidst growing tensions with the US.
Finding a Middle Ground
Sam Radwan, CEO of Enhance International, believes China will make every effort to find a compromise with the EU. He notes that the EU’s heavy reliance on China in its EV value chain makes it unlikely for the dispute to escalate to the same level as the US-China trade war.
Tariffs and Counter-Tariffs
The EU has imposed tariffs of up to 45.3% on Chinese EVs, prompting Beijing to retaliate with tariffs on European exports such as pork, dairy, and brandy products. European trade officials are still in talks with their Chinese counterparts, seeking a resolution.
Rebalancing the Relationship
Maros Sefcovic, European Commission’s vice-president, describes China as the “most challenging trading partner” for the EU. He emphasizes the need for the EU to be more assertive in challenging China’s structural imbalances and unfair practices.
Investment and Production
Eugene Hsiao, head of China Autos at Macquarie Capital, believes China will pressure the EU to lower tariffs. If a lower tariff is agreed upon, this could impact the level of investment Chinese EV makers would place into local production in the EU.
A Diplomatic Effort
China’s commerce minister, Wang Wentao, has urged France to take an active role in pushing the EU towards a solution acceptable to both the European and Chinese electric vehicle industries. Meanwhile, French junior trade minister Sophie Primas has assured Wang that the EU will continue to trade with China but will not yield to pressure on essential points.
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