Vehicles? Meat? Scent? If China and Europe get into a trade war, China has a lot of options.
Beijing (AP) — Having imposed tariffs on electric vehicles made in China, Europe is now waiting to see if the other shoe drops.
Experts caution that a worsening trade conflict may start, driving up consumer costs and harming exporters and their employees on both sides. China, with its burgeoning economy and population of over a billion people, and Europe, with its comparatively affluent population of over 400 million, represent significant markets for one another.
The head of the European Chamber of Commerce in China, Jens Eskelund, described the situation earlier this year as "almost like watching a slow motion traffic accident unfold." The off-ramp can still be found and the accident hasn't happened yet. It is becoming more pressing.
On Thursday, representatives of the Chinese government reaffirmed their commitment to taking "all necessary measures" to safeguard the rights and interests of Chinese businesses.
The World Trade Organisation may receive complaints from China, according to a spokesman for the Commerce Ministry named He Yadong. He demanded that the EU "adjust its incorrect practices." China sent a warning in January when it opened an anti-dumping probe into shipments of European alcohol, notably French cognac. Leading the charge in favour of the EU probe that led to the introduction of EV tariffs on Wednesday was France.
China sent a warning in January when it opened an anti-dumping probe into shipments of European alcohol, notably French cognac. Leading the charge in favour of the EU probe that led to the introduction of EV tariffs on Wednesday was France. In addition, the EU is looking into subsidies provided to Chinese solar and wind energy companies. European manufacturers have long complained that China unfairly blocks their access to the medical device market.
In order to address the results of the EV probe, the European Union stated it has contacted China. If the two parties are unable to come to an agreement, the tariffs will go into force on July 4. It would take four months to finalise the rates, which would be provisional.
Will China target Germany's Mercedes and BMW in a trade war by imposing tariffs on European autos? Would it target the politically powerful farmers in Europe with tariffs on agricultural products? or high-end French and Italian products?
Chinese businesses intend to request that the government open anti-dumping investigations against specific EU pig goods and subsidies for specific dairy products, according to a report published in China's state-run Global Times newspaper. The spokesperson for the ministry of trade stated that if the conditions were met, the authorities would consider any requests for investigations and open a case.
A well-known Chinese auto industry expert was also cited in The Global Times as advocating for higher import taxes on cars with bigger engines in order to cut carbon emissions. This move would hurt high-end German exports from Mercedes and BMW. Volkswagen stated that the European Union is encouraging a continuous trend towards protectionism, nationalism, and isolationism and voiced concern that the tariffs imposed by the EU on Chinese electric vehicles may intensify trade disputes. VW released a statement saying, "The negative effects of this decision outweigh any potential benefits for the European and especially the German automotive industry."
According to research company Sanford C. Bernstein, the majority of German automakers' automobiles sold in China are built locally, thus the impact on them will be lessened. Only 2% of Volkswagen's sales in China come from imports that could be subject to additional tariffs; similarly, 15% of sales go to BMW and 19% to Mercedes-Benz. Gabriel Wildau, a China expert at the Teneo consultancy, predicted that China would also apply retaliatory tariffs on French and Italian luxury products, cosmetics, wine, chocolate, and furniture before the announcement.
He noted that France and Italy have been proponents of tariffs on electric vehicles within the EU, while Germany fears reprisals against its automakers and chemical suppliers. It's unclear how much the temporary tariffs would affect EV sales in China. Even in the face of tariffs as high as thirty percent, certain Chinese businesses may still turn a profit. The 10% tariff that already applies to cars is supplemented by the provisional tariffs, which vary in amount from 17.4% to 38.1% according on the manufacturer. The China Chamber of Commerce to the EU stated that the increased charges will provide a significant market barrier for Chinese EV exports.
According to calculations by the Rhodium Group, a 30% tax would result in a profit for five of six models produced by BYD, the biggest EV manufacturer in China, but a made-in-China Tesla Model 3 would experience a loss on sales.
