Economic Watch: EU Risks Backfire with Proposed Tariffs on Chinese EVs
The European Commission’s recent proposal to levy tariffs up to 36.3 percent on Chinese-manufactured electric vehicles (EVs) has ignited a storm of concerns among industry insiders and experts. There’s a growing apprehension that this maneuver could inadvertently exacerbate the European Union’s (EU) competitiveness woes, derail its aspirations for a greener future, and escalate trade frictions with China, rather than safeguarding the European automotive sector as initially intended.
Michael Schumann, chairman of the Board of the German Federal Association for Economic Development and Foreign Trade, sharply criticized the EU’s tariff proposal as misguided, highlighting the pivotal innovations and investments Chinese EV manufacturers have poured into the European market. These contributions, he noted, have significantly propelled the evolution of the industry.
Across the board, experts argue that the surge in Chinese EV imports, though a challenge, could stir European automakers to innovate and remain competitive. Tadas Povilauskas, an economist from SEB Bank in Lithuania, described the EU’s anti-subsidy investigations as politically motivated. Meanwhile, Zoltan Kiszelly, of Hungary’s Szazadveg Institute, called the EU’s approach shortsighted, especially given the current slump in European EV sales.
Advocates for competition like Kiszelly believe that the answer to Europe’s auto industry competitiveness does not lie in insulation from Chinese innovation but in embracing it to spur European manufacturers into further innovation.
The discord between the EU’s proposed tariffs and its green ambitions has also come under scrutiny. Critics argue that implementing these tariffs could obstruct the collaborative efforts needed for a global green transition, suggesting that such protectionist measures might deter the expansion of EV adoption, counteracting the EU’s climate objectives.
Luigi Gambardella, president of the digital association ChinaEU, emphasized the critical role of EVs in Europe’s shift to a low-carbon economy. He cautioned that the proposed tariffs could inflate EV costs further, deterring consumer adoption and stalling the transition from fossil fuels.
The repercussions of the EU’s potential tariffs are not limited to stifling innovation or hindering the green transition; they might also have lasting impacts on EU-China trade relations. From subcontractors and importers to maintenance providers, many stakeholders within the EU stand to face challenges if these tariffs come into effect. As Croatia’s political analyst Mladen Plese pointed out, the move might even prompt a regression to obsolete technologies within the European auto industry due to the economic infeasibility of EVs.
Even countries like Estonia, with no significant automotive industry, could feel the ripple effects through the broader economic impacts on subcontractors, importers, and consumers. Triinu Prits from Estonia’s Ministry of Foreign Affairs emphasized the potential for such tariff measures to make the European market less appealing to Chinese collaboration and investment.
Gambardella warned of the wider repercussions on market dynamics and the future of mobility in Europe, cautioning against the protectionist tilt as a significant threat to current and future industry conditions.
In conclusion, while the proposed tariffs on Chinese EVs aim to protect the EU’s automotive sector, the broader implications could undermine this goal. The consensus among experts suggests a need for the EU to consider the long-term effects on innovation, trade relations, and its green transition ambitions, advocating for a more collaborative approach to address the challenges posed by global automotive competition.
