Europe has recently announced tariffs on China-made electric cars, sparking concerns about potential retaliatory measures from China. The continent is now on edge, waiting to see if China will respond with tariffs on European cars, particularly targeting German manufacturers like BMW and Mercedes. There are also speculations about possible tariffs on agricultural products, luxury goods from Italy and France, and other retaliatory actions.
Analysts are warning of the risks of an escalating trade war between the two major markets. With China's vast population and Europe's affluent consumer base, the implications could be significant for both sides. The European Chamber of Commerce in China has likened the situation to a slow-motion traffic accident, emphasizing the need to find a resolution before it's too late.
While the Chinese government has vowed to protect its interests, the specific measures it might take remain unspecified. China has already initiated an anti-dumping investigation into European brandy exports, signaling its readiness to respond to trade disputes.
The European Union has also been investigating various trade practices by China, including subsidies to wind and solar companies and market access restrictions for medical devices. The recent tariffs on Chinese electric vehicles are set to take effect on July 4 unless a resolution is reached between the two parties.
Amidst concerns from automakers like Volkswagen, who fear an escalation of trade conflicts, the impact on German manufacturers may be somewhat mitigated due to the localization of production in China. However, the potential tariffs could still affect a portion of their sales.
Chinese companies are reportedly considering anti-dumping investigations into EU pork products and subsidies for dairy items. There are also discussions about raising tariffs on imported vehicles with larger engines to reduce carbon emissions, which could impact high-end German exports.
Overall, the situation remains fluid, with uncertainties about the extent of the impact on Chinese EV sales and the broader implications for global trade. Both China and Europe are navigating a delicate balance between protecting their industries and avoiding a full-blown trade war that could harm businesses and consumers on both sides.
