EUROPE SHOULD NOT GET TOO COMFORTABLE
Doing nothing wasn’t really an option for the Commission as the rules-based trading system is being widely ignored. There’s no question that China has heavily subsidised domestic producers, and the United States is now doing similar with the Inflation Reduction Act.
Washington’s decision last month to quadruple tariffs on Chinese EVs to 100 per cent has all but closed off a potential export market, increasing the risk that Chinese autos wash up elsewhere. French President Emmanuel Macron can’t afford to look soft on the Chinese threat, with parliamentary elections now looming and the far-right gaining ground.
Washington’s far more aggressive response is helpful in one respect: It makes Brussels’s approach appear comparatively moderate, and the Commission insists its response is “fully in line with relevant WTO (World Trade Organization) law.” While this might dissuade Beijing from excessive retaliation, I wouldn’t bet on it.
Increased tariffs provide Europe’s automakers with a bit more breathing space, but they shouldn’t get too comfortable. Chinese EVs are a new force to reckon with in global automaking. If domestic manufacturers fail to invest, innovate and cut costs, no amount of tariffs will save them.
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