The European Union's recent decision to impose tariffs on electric car imports from China has significantly strained trade relations between the two major economies. This move highlights the challenges in the ongoing policy consultations, indicating that mutual compromise remains elusive.
Hungary Prime Minister Viktor Orban has characterized Europe's actions as launching an \"economic cold war\" against China. This sentiment is echoed in some European media outlets, which are actively discussing potential retaliatory measures from China. The fear is that without a compromise by the end of October, both the EU and China may edge closer to a full-fledged trade war.
Unlike previous trade disputes, the EU has adopted a markedly political stance in its countervailing case against Chinese-made electric vehicles. This approach not only aims to safeguard the \"industrial security\" of European automakers but also sets a precedent for its broader \"economic security strategy.\" By initiating investigations independently of the European auto industry's complaints, the EU has sidestepped opposition from key business stakeholders.
Elevating trade issues to a political and security level departs from traditional economic principles and market norms. This shift complicates China-EU economic and trade cooperation, pushing it into a precarious position. The EU's investigation revealed that German and other European automobile companies hold a significant share of China's electric vehicle exports to Europe. Imposing high tariffs would increase costs for both Chinese and European car manufacturers, ultimately harming European consumers who would face higher prices and fewer options.
While the EU's intention is to protect its auto industry from what it perceives as \"unfair competition,\" such excessive protectionism may hinder the long-term health and sustainability of the European car sector. Balancing protective measures with fair trade practices remains a critical challenge for the EU as it navigates its economic relationship with China.
Reference(s):
cgtn.com
