«The best option for Europe to grow and work in partnership with China. But Europe has chosen to surrender to protectionism”. Deluge of criticism from Chinese state media on the European Commission’s decision to impose temporary additional duties on Beijing’s imports of electric cars. The Chinese government has already started its reaction, which from the rhetorical level, steps towards counter-tariffs are expected where they could hurt European countries.
China has already announced that it “reserves the right” to appeal to the World Trade Organization to protect its companies, but is targeting several European products. Brandy and other alcoholic beverages could be among the hardest hit. Already in March, when the European Union feared additional tariffs on electric vehicles, China launched an anti-dumping investigation on brandy imported from the EU. During his visit to France in May, Xi Jinping seemed to have given positive signals to French President Emmanuel Macron by accepting two bottles of Cognac as a gift. But the Chinese leader knows that Paris is among the major sponsors of the duties on his cars.
Likewise, China knows that Germany has opposed the tariffs the most. Both its car manufacturers, which have enormous interests in China, and the government of Chancellor Olaf Scholz, who through a spokesperson asked immediately after the communication on the provisional additional tariffs to sit at a table with Beijing.
Another sector that fears backlash is the food industry. In particular, the producers of pork and dairy products, who are most exposed to the Chinese market, are alarmed. Also pay attention to aviation, cited some time ago by Chinese experts as a possible target, but also to luxury. China is a key market for products such as bags, perfumes, shoes, clothes and other accessories. Moves in this sector could really hurt. These will likely involve anti-dumping or anti-subsidy investigations that could lead to a temporary halt in trade, even if the resolution is positive. In this sense, the move could also be strategic and aimed at fomenting divisions within the European Union and reopening the negotiating table with Brussels from a position of strength.
According to Chinese media, the government is also considering a symmetrical response, raising duties on imported cars with large-displacement engines. The rate could be increased up to a maximum of 25% and would be a move also motivated by the Chinese desire to reduce the percentage of fossil fuel engines and increase electric ones, in accordance with energy transition objectives. According to calculations by the China Passenger Car Association, the EU exports cars with large-displacement engines to China every year for a total value of 18 billion dollars, higher than the value of electric vehicles exported from China to the EU in 2023. Paying the price the consequences would first and foremost be German manufacturers such as BMW and Mercedes-Benz.
Electric cars, the EU launches anti-China duties. Stellantis: “No to measures that divide the sector”. Beijing’s anger
Then there is the hypothesis of activating the strategic lever of rare earths, the mineral resources crucial to the development of the green technological industry. China dominates its production (approximately 70% of the global share) and extraction, controlling the crucial junctions between Indonesia (nickel), the Democratic Republic of Congo (cobalt) and South America (lithium).
However, the Chinese media underline that the additional duties “will not stop the international projection” of the Chinese electric car giants. According to an analysis by the Rhodium Group, the giant BYD, which competes with Tesla for the leading world producer of battery electric vehicles, still has room to grow in Europe, even with the new duties. BYD will in fact suffer an increase in duties of 17.4%, much less than, for example, SAIC (38.1%). “Tariffs of this level could even allow BYD to reduce its already competitive prices to gain market share in Europe,” claims Rhodium, recalling that the company is already building a factory in Hungary. BYD’s European profits are 45% higher than its Chinese ones, meaning the market will remain attractive even with the new tariffs.
