Europe’s move to impose tariffs on Chinese electric vehicle makers is dividing the region between countries that want to punish China and those concerned about the backlash that China’s retaliatory measures could have on their export industries. Regarding a possible trade war between Europe and the Asian giant, we spoke to an expert about the impact that the European Commission’s decision could have on our exports.
Countries that fear retaliation include Germany and Sweden. And there is nervousness about the consequences of a possible trade war with the Asian giant, given that these are the regions from which many cars are shipped to Asia, and there are fears that the consequences will be the same. The dark scene extends beyond the cars, however.
In this regard, Christian Castillo, professor of the Department of Economics and Business of the UOC, researcher of the SUMAT group, told the newspaper that the decision of the European Commission The protection of one of the important sectors of its territory, such as the automobile sector (namely 7% of its GDP), is “overdue.”
“For many years, some industry has been relocated and weight has been given to manufacturing in foreign countries, especially Asia and China. Now we realized that their cars are more competitive than ours, and the sector is in danger. A recent Allianz Trade report estimates that the rise of Chinese electric vehicles could mean losses for the sector of €7 billion by 2030. Therefore, the increase in import tariffs is aimed at increasing competitiveness in relation to the Asian giant. although this may have the opposite effect”– noted the expert.
Regarding the Chinese plan to counter European measures, Castillo added that “we see some Chinese companies rates for entry into the US of car production (Chery case). They will have European labor (with its cost), but they will be competitive in the cost of raw materials (they have it better than us: microchips, copper, etc. are cheaper…).”
Impact on European exports
In recent weeks, the Chinese state press has already suggested possible countermeasures, such as increasing import duties on large-engine cars (Mercedes-Benz, BMW and Volkswagen) or “anti-dumping” investigations into dairy products and pork from Europe.
This last case would be particularly serious for Spain, since it main exporter of pork to China – the most popular among Chinese consumers – within the framework of the “Twenty Seven”. Last year, the Iberian country sold about 382,000 tons to the Asian giant.
“We may find that there are import triangulations, as happens in the USA, in which, even with tariffs of 27.5%, we find that they are played out through Mexico or Canada. Finally, we may also find (as China has already threatened) that they will also impose tariffs on our exports,” the expert said.
Export from Spain to China.
In this spirit, he detailed Spain’s main export to China In March: pork (81 million euros), esposape (meat and food by-products) (43.7 million), ethylene polymers (32.5 million), packaged medicines (25.8 million) and copper scrap (18.4 million) . In 2022, the Asian giant’s export record remained at $6.87 billion.
“China’s vindictive actions could pose a challenge to the competitiveness of our products. will force us to look for alternatives to our markets. I believe it is important to avoid a trade war, especially when we have already seen what it can lead to in the US and China,” Castillo said.