In response to the US imposing a 100% tariff on electric vehicles, China has threatened retaliation. China has also warned the European Union (EU) against taking similar actions. Following the US’s imposition of a 100% tariff on various Chinese goods, including electric vehicles, China is considering reciprocal measures. Here are the details of this escalating trade tension…
Increasing Trade Tensions
Trade tensions between China, Europe, and the US have been escalating in recent years, particularly in the electric vehicle sector. China, a leader in electric vehicle technology, is rapidly expanding in global markets, especially in Europe. Prominent Chinese car manufacturers like NIO, XPeng, BYD, and ZEEKR are offering a large number of electric vehicles to EU countries, featuring advanced technology and luxury at highly competitive prices. China has been exporting so many electric vehicles to Europe that manufacturers are struggling to find ships to deliver them.
EU Investigation
European car manufacturers are troubled by China’s rapid expansion. The European Commission has launched an investigation into allegations that Chinese manufacturers are unfairly subsidized by the state. Additionally, Europe has threatened to impose tariffs on cars made in China.
US’s Tough Measures
While Chinese car manufacturers have not yet started selling their vehicles in the US market, the US has taken stringent measures under the Inflation Reduction Act to protect its manufacturers, increasing tariffs on Chinese goods.
25% Tariff Threat
According to Automotive News Europe, the Chinese Chamber of Commerce has informed the EU about the threat of a 25% tariff. If these tariffs are implemented, they could significantly impact American and European car manufacturers exporting internal combustion engine vehicles to China and further intensify already strained international relations. The EU’s findings on the unfair subsidies investigation regarding Chinese-made electric vehicles are expected to be communicated to China in June, suggesting that tensions may escalate soon.
Additional Measures by China
According to China’s Ministry of Commerce’s tariff page, vehicles imported from Europe with engines larger than 2.5 liters currently face a 15% tariff. However, from 2023 onwards, import figures and World Trade Organization policies allow China to increase this figure to 25% for each large-engine vehicle. To show its seriousness, China has also implied that it could impose additional tariffs on some European products, including wine and dairy products.
What Do You Think?
China’s move is likely to have significant repercussions in the realm of international trade. How do you think these tensions will unfold? Share your thoughts in the comments below.
