According to a current survey by the ifo Institute, opinions on EU tariffs for cars from China are divided. 33% consider the EU’s planned tariffs to be appropriate to counteract the Chinese government’s subsidies. 11% of participants want lower tariffs, and 6% want higher ones. Meanwhile, 33% of professors believe that no tariffs would be appropriate.
Opponents primarily warn of a possible trade war and highlight the low effectiveness of this measure.
“Dealing with China is challenging. Geopolitical risks, responses to China’s economic and export strategy, and maintaining free trade must be weighed up,” says Niklas Potrafke, head of the ifo Center for Public Finance.
Just over a third (34%) of participants are in favor of EU subsidies in future industries to reduce dependence on China, while 53% are against subsidies. The People’s Republic of China is defined by those surveyed as a partner (65%), an economic competitor or systemic rival (59%), and a geopolitical adversary (51%).
88% of professors rate the dependence of German foreign trade on China as high or very high. Additionally, 72% of those surveyed see a high or very high risk that the Chinese government will exploit economic dependence towards Germany for foreign policy goals in the next five years. In the next ten years, the risk for them will rise to 80%.
69% of those surveyed were also in favor of a de-risking strategy, while only 7% were in favor of complete economic decoupling.
Background
The European Commission announced in mid-June that battery electric vehicles (BEVs) are being subsidized in China in a way that does not comply with WTO rules, causing economic damage to manufacturers in the EU. The effects on importers, users, and consumers were also examined.
The Commission initially contacted the Chinese authorities to find a WTO-compliant solution. If a solution is not reached, provisional tariffs will come into force from midnight on July 5th.
These duties would be collected through a security deposit and would only be applied to final tariffs, the European Commission informs. The tariff rates would vary depending on the manufacturer and would be 17.4% for BYD, 20% for Geely, and 38.1% for SAIC. An average tariff of 21% would apply to cooperative producers not included in the sample. Non-cooperative manufacturers would pay 38.1%.
The anti-subsidy investigation was initiated on October 4, 2023, and must be completed within 13 months. Manufacturers like Tesla can apply for an individual tariff rate.
Both sides are currently in negotiations and are looking for an alternative solution. Details of the negotiations are not yet known.
Photo: User3204, CC BY-SA 4.0, via Wikimedia Commons