China disapproves EU EV tariffs, carmakers prepare alternative strategies

China expressed strong disagreement with the European Union's decision to increase tariffs on Chinese electric vehicles, while Chinese car manufacturers are considering adjustments and alternative strategies in response to the tariffs.

China on Thursday reiterated its disagreement with the EU's decision to impose hefty extra tariffs on electric vehicles (EVs) originating from China, saying that it does not align with regulations of the World Trade Organization (WTO).

Starting Wednesday, the EU's extra tariffs on Chinese EVs, which have been raised from 10 percent to as high as 43.5 percent, will apply for a period of five years.

"There are numerous unreasonable and non-compliant practices in the EU's investigation into Chinese electric vehicles. The Chinese side has rejected all the allegations, and provided substantial feedback and evidence, but the EU has failed to give full thought to these submissions. The ruling does not align with WTO regulations and fails to address the core concerns of the Chinese and European automobile industries," He Yadong, a spokesman of the Ministry of Commerce (MOC), told a press briefing.

The EU's decision will have immediate and significant impacts on the prices and competitiveness of Chinese EVs, according to experts.

While speaking at the 2024 Paris Auto Show, car manufacturer executives said they have not given up on the European market and are considering adjustments.

"You can't change the wind, but you can certainly adjust the sails. We'll definitely make some adjustments based on the tariffs," said Feng Xingya, president of the Guangzhou Automobile Group Co., Ltd. or the GAC Group.

In light of the EU's recent trade measures, they are becoming more cautious about setting up production plants in Europe.

"Whether local production can resolve the issue of tariffs is a complex question, to which we do not yet have an answer. The reasoning behind producing locally due to higher tariffs doesn't hold, but I believe the logic of producing where there is demand is valid," said Feng.

Dolly Zhang, a trade specialist who has helped Chinese car-makers go international for over 20 years, said that Chinese automakers have always been preparing for risks and challenges.

"Before the [EU's] trade remedy, they (Chinese car-makers) had already actively [been] looking for different route to the market, different production options, different ecosystem and cooperation, in order to prepare for different trade challenges," said Zhang, a partner of indirect tax customs and global trade of Deloitte China.

Despite of the trade tariffs, the Ministry of Commerce said China will continue to cooperate with other countries to maintain the stability of the global EV supply chain and pursue the green transformation.

China disapproves EU EV tariffs, carmakers prepare alternative strategies

China disapproves EU EV tariffs, carmakers prepare alternative strategies

China disapproves EU EV tariffs, carmakers prepare alternative strategies

China disapproves EU EV tariffs, carmakers prepare alternative strategies

The universal "reciprocal tariffs" imposed by the United States signals a decline in the U.S. economic dominance and dollar hegemony, as the country is attempting to extract excessive financial benefits from its trading partners, according to economists, who warn the Trump administration is playing a "dangerous game".

U.S. President Donald Trump last week signed an executive order on the so-called "reciprocal tariffs," imposing a 10-percent "minimum baseline tariff" before unveiling higher rates on certain trading partners. The policy sent shockwaves throughout the global economy and triggered panic on financial markets, with analysts warning of significant risks and dire economic consequences.

In an interview with the China Global Television Network (CGTN), Hong Hao, chief economist of the GROW Investment Group, a Shanghai-based hedge fund, said the tariffs reflect Trump's strategy to extract economic benefits from trading partners, particularly viewing China as a significant competitor. "Trump really believes that the trade terms with the trading partners have been unfair to the U.S., and as a result, the U.S. manufacturing sector has been hollowed out. Therefore, the U.S. is paying an excessive price for globalization, and now, it's time to pay back. I think, from this angle, he is trying to extract economic rent from its trading partners, and also he is trying to see China as one of the major U.S. rivals at this juncture. So, I think, as a result, he is playing a very dangerous game. And, as you can see, it's political theater in the sense that he is trying to dramatize the extreme pressure, so that he can get excessive rent from the opponent," he said

Trump's unilateral imposition of tariffs has eroded global confidence in the U.S. and its dollar's status, leading many to state that the American hegemony may not persist, according to Josef Gregory Mahoney, a professor of politics and international relations at East China Normal University.

"The U.S. economy is at an inflection point. There is a moment where the previous strategies being used to sustain American hegemony were no longer working. And, it's only a matter of time before the U.S. position erodes, given the fact that it's been a house of cards built on the dollar supremacy. And a lot of people don't see that as having a brighter future. This has moved past the theater stage and has moved really directly into one in which no one really has confidence in the U.S. anymore. No one has confidence in the dollar. No one has confidence in the U.S. being committed to the multilateral system, to global trade and so forth and so on," he said.

Trump playing "dangerous game" as tariff measures signal decline in U.S. dollar hegemony: economists