The issue of the European Union imposing additional tariffs on Chinese electric vehicles has been ongoing since last year and hasn't subsided yet. The EU believes that China provides excessive subsidies to its electric vehicle industry, making their prices too low for local manufacturers to compete. Therefore, in late October last year, the EU officially decided to impose a maximum tariff of 45.3%, in addition to the existing 10%, resulting in a total tax rate of 55.3%. This wasn't arbitrary; they conducted an eight-month investigation starting in September 2023, closely monitoring companies like BYD, Geely, and SAIC, examining the preferential financing, cheap land, and low-cost battery materials they received.
As a result of the tariff classification, BYD was subjected to 17%, Geely to 18.8%, and SAIC to 35.3%. Tesla, which cooperated well, only faced a 7.8% tariff, while others who did not cooperate were uniformly subjected to 38.1%. According to EU data, the market share of Chinese electric vehicles in Europe rose from 1% in 2019 to 8% in 2023, and it is estimated to reach 15% by 2025. Prices are 20% lower than those in Europe, which the EU considers unfair, and they want to balance this.
During the member state vote, there were significant differences. On October 4th last year, 10 countries voted in favor, including France, the Netherlands, Denmark, and Ireland; 5 countries opposed, including Germany, Slovakia, and Hungary; and 12 countries abstained, such as Spain and Italy. The countries that voted in favor have high exports to China and are more likely to become targets of retaliation. China's response targeted these countries because their pork, dairy products, and brandy sell well in the Chinese market. In 2023, the EU's exports of these goods to China totaled hundreds of billions of dollars, with the main suppliers being those who voted in favor.
China's countermeasures were not random but well-prepared. In June last year, they initiated anti-subsidy and anti-dumping investigations into EU pork. The major exporters of EU pork to China are Spain, Denmark, and the Netherlands, although Spain abstained, Denmark and the Netherlands supported it. European farmers have long been dissatisfied, saying that with the Russian market gone, China is their last hope. If China imposes tariffs, they would suffer losses.
Data from 2024 shows that EU pork exports to China amount to several billion dollars, with Denmark accounting for a significant proportion. Dairy products are similar. In August 2023, the Chinese Ministry of Commerce announced an investigation into EU dairy products, with the main suppliers being the Netherlands, France, and Ireland, all of whom voted in favor. EU dairy exports to China in 2023 amounted to several billion dollars, with French cheese relying heavily on the Chinese market. If China retaliates, suppliers from Australia, New Zealand, the UK, and the US will be waiting to take advantage. The European dairy association stated that losing the Chinese market would severely damage the industry.
Brandy is the most typical example. France is a major exporter of Cognac, accounting for 99.8% of EU exports to China. In August last year, China initially ruled that EU brandy was dumped, but did not immediately impose taxes. After the EU imposed tariffs, on October 8th, China imposed temporary anti-dumping duties ranging from 30.6% to 39%, though some companies could avoid them through price commitments. French wine industry complained that such high rates would make Cognac almost non-existent in the Chinese market. France was the leading force pushing for the EU's investigation into electric vehicles, now suffering the consequences. In January this year, China officially imposed brandy taxes for five years, but companies with tax exemptions could continue to sell. French exporters had no choice but to adjust and turn to other markets, but the losses were evident.
Countries that voted against the measure were less affected. German automakers like Volkswagen, BMW, and Mercedes have many factories in China and export large vehicles. If China imposed tariffs on cars, Germany would be in trouble, but currently, China hasn't touched this area. Experts analyze that this countermeasure is compliant, different from the EU's protectionism. The China Automotive Research Center said this is to promote fair trade and green development. After the EU imposed tariffs, they also mentioned the possibility of discussing alternative solutions. On October 7th last year, the Sino-European technical team continued negotiations. A spokesperson for the Ministry of Commerce stated that taxing wouldn't solve the problem, only hurt Sino-European cooperation, urging the EU to take concrete actions. China will protect the interests of enterprises.
On April 10th this year, EU Trade Commissioner Valdis Dombrovskis and Chinese Minister of Commerce Wang Wen Tao spoke on the phone, agreeing to explore a minimum pricing mechanism instead of tariffs. Negotiations started immediately. The German car industry association welcomed it, saying that tariffs were wrong and should be resolved through negotiations. German media said that the focus of the negotiations was setting a minimum price to ensure effects equivalent to tariffs. Negotiations are still ongoing this year. On June 10th, Sino-European trade warmed up again, with the summit approaching, the EU wanted to balance trade, but mentioned China's overcapacity. In July, the EU considered extending the tariffs, but the negotiation channel remained open. China filed a complaint with the WTO, and the EU also complained about China's brandy measures. Both sides exchanged documents in Geneva, and the procedure is underway.
Countries that voted in favor were not optimistic about investors; those that opposed might attract more investment. In February this year, China pushed forward negotiations. In April, price commitment negotiations were restarted, discussing a minimum price as an alternative to tariffs. In June, the negotiations reached a critical stage, with the Ministry of Commerce stating there were progress, but the gap still existed. On July 4th, China imposed brandy taxes for five years, but companies with tax exemptions could continue to sell. In August, the share of Chinese electric vehicles in Europe returned to 10%, with market data released. The negotiations ended on August 31st, but the communication channel remained open. China protects its rights, and the EU seeks balance.
Trade is not a zero-sum game, and both sides want green transformation, but subsidy competition can cause problems. Chinese electric vehicles export green products, helping the world combat climate change, but the EU fears job losses. Countermeasures focused on supporting countries, a strategy to make divergent countries think. German automakers oppose it because they are deeply rooted in China. France pushed for tariffs, now suffering from brandy losses. The countermeasures are precise, avoiding a full-scale trade war, leaving room for negotiations. Trade is like playing cards, the move depends on the opponent. The EU has significant divisions, and China targets the pain points, forcing talks. The future depends on the outcome of the negotiations. If the minimum price becomes reality, tariffs will be removed, benefiting everyone. Otherwise, friction continues, and consumers will bear the cost.
In recent months, there have been new developments. By August 13th this year, the Chinese Ministry of Commerce took countermeasures against two financial institutions in the EU, prohibiting them from conducting transactions within the country. These two institutions are UAB Urbo Bankas and AB Mano Bankas, from Lithuania, although Lithuania abstained in the vote, this countermeasure may be linked to broader EU measures. On July 18th, the EU listed two Chinese financial institutions in the sanctions against Russia, and this step by China is a response. Medical equipment is also involved, on July 6th this year, China restricted imports of medical equipment from the EU, affecting French and Dutch suppliers. The procurement value of these equipment exceeded 45 million euros, and suppliers had to adjust their supply chains.
In terms of negotiations, on July 5th this year, the technical negotiations were basically completed, but there were disagreements on implementation details. On July 22nd, the China-EU Summit was held, where leaders discussed trade, rare earths, and Ukraine issues, but the differences were not completely resolved. In August, the share of Chinese electric vehicles in Europe dropped to 10%, slightly higher than the previous 8%, but lower than the expected 15%, indicating that the tariffs had some effect. China's countermeasures put pressure on the supporting countries, with French wine sales declining and Danish pork exporters facing inventory pile-ups. Within the EU, Germany continued to push for negotiations, as their automakers have a large market share in China and do not want to get involved in a full-scale confrontation.
From a broader perspective, China's countermeasures are not for revenge, but to protect fairness. The EU imposed tariffs based on subsidy investigations, but China believes this is to protect domestic industries. The Chinese electric vehicle industry relies on technological innovation and scale effects, with low prices being competitive, not just due to subsidies. The selected countermeasures are accurate, as pork and dairy products are the EU's advantages in exports, but the Chinese market is large, so losing it is a pity. The brandy tax made the French wine industry reflect, highlighting the costs of the EU's investigation. Financial institution countermeasures expanded into the financial sector, indicating that the friction may escalate, but China maintains restraint, without a complete ban.
EU member states have varied reactions. France insists on protecting the automotive industry, but the loss of the wine industry has caused internal voices. The agricultural departments of the Netherlands and Denmark lobbied the government, fearing that the countermeasures would expand. Countries that opposed, such as Germany and Hungary, have seen increased Chinese investments, such as Hungary attracting BYD to build a factory, avoiding tariffs. Spain abstained, but the pork investigation made them cautious. Overall, the EU's divisions have made China's countermeasures effective, prompting more concessions at the negotiation table.
The World Trade Organization procedures are proceeding, with China filing a complaint against the EU's tariffs and the EU responding with a complaint about China's brandy tax. In Geneva headquarters, both sides exchange documents, and the ruling may take several months. Trade experts say that such disputes are common and are ultimately resolved through negotiations. The minimum price mechanism is key. If the EU accepts China's commitment to a minimum price for electric vehicles, the tariffs can be removed, similar to the previous photovoltaic case. The Chinese Ministry of Commerce emphasized that cooperation is better than confrontation, promoting green transformation.
Currently, the negotiation channels remain open, with no new breakthroughs, but no deterioration. Chinese electric vehicle exports have adjusted, shifting to Southeast Asia and the Middle East markets. Although the European market share has declined, global demand is still rising. European automakers like Volkswagen are collaborating with Chinese partners to develop new models to cope with competition. The countermeasures have cost the supporting countries, reminding them of trade reciprocity. In the coming months, if the minimum price is agreed upon, Sino-European trade can stabilize. Otherwise, the friction could drag on, affecting supply chain stability.
China's strategy is practical, targeting pain points without a one-size-fits-all approach. The EU's tariffs aim to protect local employment, but they overlook the contributions of Chinese technology. Electric vehicles are the future of green energy, and subsidy competition needs to be handled rationally. Both sides want to showcase achievements at climate conferences, but trade barriers won't help. The countermeasures target the supporting countries, logically clear, avoiding EU unity. China protects its rights, and the EU seeks balance, this game tests patience.
Original article: https://www.toutiao.com/article/7547870026612490815/
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