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Trade War With China: US Forcing EU to Shoot Itself in the Foot, Again

© AP Photo / Ng Han GuanModels pose near the latest offering from Chinese automaker BYD during the Auto Shanghai 2023 show in Shanghai, Wednesday, April 19, 2023
Models pose near the latest offering from Chinese automaker BYD during the Auto Shanghai 2023 show in Shanghai, Wednesday, April 19, 2023 - Sputnik International, 1920, 09.06.2024
The Chinese media issued a warning to the European Commission (EC) about the potential imposition of tariffs on China's electric vehicles (EV) in Europe. Will Brussels lend a sympathetic ear or fall into a sanctions trap?
The European Commission is preparing to announce its conclusions following a months-long anti-subsidy inquiry into Chinese electric vehicles.
According to some estimates, Chinese EVs are around 20 percent cheaper than their European counterparts.
The price gap has prompted the Commission to consider additional tariffs — on the pretext that Chinese car makers receive state aid, which the European Union classes as an "unfair advantage".
The probe was launched despite the Commission receiving no formal complaints from the European car-making industry. In the absence of actual harm done, it focuses on the "potential" threat from the influx of cheap Chinese EVs to the European market.
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The Global Times, an English-language Chinese daily, stressed that the Commission's move appears to be highly unpopular within the bloc.
It quoted to German Chancellor Olaf Scholz's September 2023 remarks that German carmakers should not fear their Asian rivals, and Swedish Prime Minister Ulf Kristersson's May 14 warning that "a wider trade war where we block each other's products is not the way to go."
Bloomberg cited European auto-manufacturers also warning against the move.
Last month, Stellantis Chief Executive Officer Carlos Tavares called possible tariffs against Chinese EVs a "big trap" that could accelerate inflation. Mercedes CEO Ola Kallenius stated earlier this month that Europe should resist the call for protectionist measures, while former Volkswagen CEO Herbert Diess noted last week that slapping tariffs on Chinese EVs could postpone the Europe's transition to clean energy and spark a dangerous worldwide trade war.
Western carmakers' concerns are understandable given that Volkswagen, Porsche, BMW, Mercedes and others profit from sales in China. Many German companies produce their vehicles in the People's Republic where energy and labor are much cheaper than in Europe.
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"That begs the question as to why the European Commission moves forward such an unpopular and dangerous step that lacks any factual and legal basis," noted Global Times, suggesting that some EU politicians want to use growing tension between Beijing and the bloc for their own political gains — and naming Washington as the major driving force behind the looming EU-China tariff war.

In mid-May the Biden administration announced additional tariffs on Chinese-made electric cars, solar panels, semiconductors, steel and other products. Chinese EVs shipped to the US now face a whopping 100 percent import tax.
The Chinese daily said it was no coincidence that the Commission's announcement will be made following the European Parliament elections from June 6 to 9, as tariffs would cause "considerable losses for EU businesses and consumers."
"If there is any question about whether China will respond and how it will respond, one can look at how China responded to the US-initiated trade war with China over the past several years. China will not escalate the situation, but make no mistake, its response will be sufficient and felt by the EU side," the newspaper warned.
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Bloomberg shed some light on what Beijing could do in response to Brussels' punitive measures:
China may impose retaliatory tariffs up to 25 percent on EU-made cars with large engines, meaning that Mercedes-Benz, Porsche and BMW would be affected the most.
European aviation, agricultural and dairy goods, wine and brandy could face tit-for-tat levies.
Beijing may restrict exports of materials and components vital for the EV production such as rare earths, including lithium, which is indispensable for making car batteries.
European carmakers which have factories in China are likely to fall prey to a possible trade war.
Last but not least, Beijing may introduce restrictions on tourism to the Europe to inflict additional economic damage.
Europe now finds itself between a rock and a hard place. It has already followed Washington's suit in introducing sweeping sanctions against Russia — which then backfired leading to de-industrialization in some former industrial powerhouses, such as Germany.
The European bloc is said to have rebounded from a "mild recession," but its 0.3 percent GDP growth in the first quarter of 2024 appears weak.
The West's trade war against China could deal a new blow to the European economy. The question is how long the EU will continue to harm its own interests under Washington's guidance.
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