China is looking to steer clear of another trade war following its previous one with the United States. While it asserts its readiness to take all necessary measures to protect its companies, China has expressed its willingness to negotiate with the European Union.
According to the Chinese newspaper Global Times, Beijing has asked the EU to abolish preliminary tariffs on Chinese electric vehicles by July 4.
Context of the Tariff Dispute
The EU has planned to impose provisional tariffs of up to 38.1% on electric vehicles produced in China, starting from July 4. These measures are part of an investigation into alleged excessive and unfair subsidies to Chinese electric vehicle manufacturers. China’s request to eliminate these tariffs comes from a desire to avoid another trade conflict, reminiscent of the one that began with the U.S. during the Trump administration.
Negotiations were recently reignited following a call between EU Commissioner Valdis Dombrovskis and Chinese Commerce Minister Wang Wentao. This discussion occurred during the visit of Germany’s Economy Minister to China. Both parties agreed to restart negotiations on the tariffs. The EU has emphasized its openness to dialogue, although the negotiations are expected to be complex. China must demonstrate a willingness to make significant concessions.
A spokesperson for the European Commission described the call as “constructive” concerning the investigation, but emphasized that any outcome must effectively address harmful subsidies. Meanwhile, the Global Times has reiterated that abolishing the tariffs by July 4 would be the best decision, though this seems unlikely given the political climate in Europe, especially with the French elections and the prolonged decision-making process in Brussels.
Rising Tensions Between Brussels and Beijing
China has indicated it has retaliation measures ready if the Commission does not withdraw the tariffs, holding Brussels fully responsible for the escalating tensions. As a countermeasure, China is considering launching anti-dumping investigations into European pork imports and anti-subsidy investigations into European dairy products and large-engine gasoline vehicles. China maintains that the development of its automotive industry is attributed to technological and industrial supply chain advantages.
With the EU’s final decision on the tariffs expected by November 2, 2024, it appears that unless China addresses all the issues concerning Brussels, the tariffs are unlikely to be removed. The unfolding situation suggests a complicated and potentially strained trade relationship between the EU and China, as both sides navigate these economic challenges.
