Fears of a trade war after European tariffs on Chinese electric cars economy

German car companies protested the European Union’s decision to move forward with imposing customs duties on Chinese electric cars, while environmental groups considered that this decision would enable new European electric cars to compete, at a time when some fear that this decision will ignite broader trade tensions, According to what Forbes magazine said.

On Friday, European Union member states agreed to impose duties of up to 35%, in addition to the current 10% duty. However, the European Commission said in a statement that negotiations will continue with China.

The European Union found that China provided unfair support to its industry, which China denies, threatening to impose tariffs on European products such as dairy and cars.

Companies object

According to a report from Automotive News Europe, companies such as BMW, Volkswagen, Mercedes, and Stellantis objected to the increased fees. The European Automobile Manufacturers Association also expressed its hope that ongoing negotiations would lead to finding an alternative to increasing duties.

According to a report published by Reuters Breaking Views, titled “Electric car tariffs are just the first step in the EU-China war,” this deal excludes hybrid cars in which Chinese companies have a competitive advantage.

The report indicated that trade tensions between the European Union and China may extend to other areas.

The report added: “It is expected that these duties will limit China’s ability to compete with European companies such as Volkswagen and Renault, and encourage them to build factories in Europe. However, imposing duties does not mean that China will exit the market completely, but rather European companies will still face challenges.” Other”.

On the other hand, Forbes said that Chinese companies such as BYD have already begun building an electric car factory in Hungary, and major Chinese players are considering similar plans.

Trade war

The Reuters Breaking Views report warned that this move could lead to a trade war, as China may respond by imposing duties on sensitive European exports such as battery materials or European luxury goods.

On the other hand, higher duties will allow European car companies to regain a large portion of the market they lost to Chinese electric cars, but on the condition that the European Union continues to maintain carbon dioxide emissions targets, according to the environmental pressure group “Transport and Environment.”

The Transport & Environment Group added that if the European Union’s CO2 emissions targets are relaxed, sales of electric cars produced by European companies will stop, because they will focus on more profitable internal combustion engine cars, and delay the launch of affordable electric cars.

Julia Poleskanova, senior director at Transport & Environment, said: “Imposing higher tariffs on electric cars is the right move, but this must be accompanied by clear CO2 emissions targets.”

“This is part of an integrated industrial policy to boost electric vehicle production in Europe. However, the EU may face negative consequences if it delays achieving the 2025 targets while restricting the import of affordable Chinese electric vehicles,” she added.