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US tariffs on electric cars put Europe in trouble

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A decision on imposing provisional duties on electric vehicles made in China is expected by the June 5 deadline; Brussels is believed to have gathered extensive evidence of the existence of subsidies in the sector and their distortion of the European market.

But the USA has gotten the EU into trouble. US President Joe Biden's plan to impose 100 percent import tariffs on made-in-China electric vehicles is seen as a way to force Brussels to act, and also to give the Commission a benchmark against which calculate higher duties.

“I think this increases pressure for the EU to also impose tariffs on Chinese electric vehicles, at the higher end of the 20 to 60 percent range,” said Rem Korteweg, a trade and geopolitical expert at the Clingendael Institute, a Dutch think tank.
“It gives the EU the cover to do that. Brussels can point to the DC and say it is pursuing a coordinated approach."

There was already a feeling in Brussels that the previous 27.5% US tariff on Chinese electric vehicles meant Europe was their most logical export market. In fact, the export of Chinese electric cars to the USA was practically nil. With the 100% tariff, this push from China towards the EU becomes even stronger.

Research by Rhodium Group last month found that the EU's average anti-subsidy duty is 19 percent, and the analysis hypothesized that Brussels would need a duty of around 50 percent to prevent a deluge of Chinese EVs in its ports.

Europe, for a change, is divided

Some EU member states with large automotive ties to China, however, have expressed their opposition to any push to match the United States, or to impose tariffs on imports.

“We don't want to dismantle global trade, it's a stupid idea,” Swedish Prime Minister Ulf Kristersson said this week, Politico reported. “Punitive tariffs as a one-size-fits-all solution are not a good idea for importing and exporting countries.” It is no coincidence that the Swedish Volvo is part of the Chinese Geely holding group.

Speaking at the same forum in Denmark, German Chancellor Olaf Scholz pointed out that “currently at least 50% of electric vehicle imports from China come from Western brands that produce locally and import into Europe.” Therefore the imposition of duties on cars produced in China would lead to an increase in the prices of cars sold with European brands! A nice own goal.

The Commission has the authority to impose provisional duties on imports without the support of Member States. But these would have to be voted on by the capitals with a qualified majority if they were to become permanent.
Commission sources said no decision had been taken and insisted that no pressure had been felt. Resistance from member states had been anticipated, and there is a prevailing feeling that if Brussels backs down now, it will appear weak in Beijing's eyes.

In an interview with Bloomberg this week, Macron reiterated his support for the probe.

“It's not a geopolitical agenda, we don't want to blackmail and push back some of the production, but we want to make sure it's right. It is right to launch precise investigations, examine the situation in detail and review it. If we are weak, if we are threatened by the fact that there may be retaliatory measures, we don't do what we need to do,” Macron said.

The imposition of heavy duties on Chinese imports would make the transition to electric mobility even more expensive for European citizens, because it is clear that the myth of the low-cost European electric car is, in fact, a myth, like the Arabian phoenix. So without Chinese cars we must forget about the increase in electric mobility. Yet another programmatic failure of the Commission and, in general, of the transition policies implemented without taking into account the market and the timing of technology.

According to the Rhodium report, “EV imports from China into the EU increased from $1.6 billion in 2020 to $11.5 billion in 2023, accounting for 37% of all EV imports in the bloc.”

“While the market share of Chinese-made EV models in the European market has increased only slightly, reaching 19 percent, the share of Chinese and Chinese-owned brands has increased significantly over the past two years.”


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The article US tariffs on electric cars put Europe in trouble comes from Economic Scenarios .


This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/i-dazi-usa-sulle-auto-elettriche-mettono-nei-guai-leuropa/ on Wed, 15 May 2024 13:04:04 +0000.