Lhe European Commission (EC) has announced that it will impose provisional tariffs of 17.4% to 38.1% on imports of Chinese battery electric vehicles from July 4. It was only a matter of time before this decision was made. Although importing cheap Chinese electric vehicles would accelerate the climate transition and increase Europeans’ purchasing power, a massive importation would hit Europe in its industrial heartland.
The turnover generated by the automotive industry represents more than 7% of the total GDP of the European Union (EU), while direct and indirect employment in this sector represents 6.1% of total employment. The EC could have waited until the first economic layoffs in the French and German automobile industry were announced. She chose to anticipate. The trade war between China and the United States is in reality a war for future hegemony.
In Europe, it is the business model of recent decades – Western technology in exchange for a huge Chinese market – that is in danger, now that China is entering the European market with its own products. This increases European resentment towards China’s unfair trade practices, which are flooding Europe with cheap products.
Hungary is the world’s second largest producer of batteries
Automotive is an example, but the EC has recently also carried out investigations into rail and solar projects – which were closed after the Chinese companies withdrew. An anti-subsidy investigation into Chinese wind turbine suppliers is still ongoing. Further investigations could follow over complaints about cheap clothing and unbranded white goods sold through Chinese online platforms such as Shein or Temu.
The EU and China are currently only warming up to the coming war. China’s reaction to these barriers will be twofold. First, imposing tariffs will further encourage Chinese companies to build factories overseas.
Chinese battery companies, for example, plan to step up investments in several countries, including Europe and the United States. The place where they are making the biggest investments is Hungary, which is expected to become the world’s second largest battery producer this year, behind China. This type of reaction is not abnormal.
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