The Biden administration has increased U.S. tariffs on Chinese cars, but international cooperation is essential to counter China’s excess production capacity.
The European Union is expected to decide during this week Whether to impose tariffs on passenger vehicle imports from China, a key move that would help in larger efforts to ease the sector’s massive overcapacity.
We have been warning for months that if Chinese imports penetrate the U.S. market, ‘Extinction-level event’ for US auto industryThanks to heavy government subsidies, Chinese cars are sold for ridiculously low prices, and we’re not the only ones. resounding of alarmThe White House also appears to be taking notice, the Biden administration announced in May. Raise tariffs on auto imports from China to 100%.
But while previous tariffs have been enough to keep Chinese imports out of the U.S. market, Volvo plans to introduce it this year This is not the case in most parts of the world. China’s car imports The market is flooded In regions such as South America, Mexico, Southeast Asia and Australia, Chinese automakers are turning their attention to Europe. It’s already caused a lot of problems.
Now the EU may be ready to strike back. Last year, the European Commission launched an investigation into Chinese car imports, the results of which are due to be published as early as Wednesday and could lead to tariffs on Chinese car imports.
The B.B.C. report “It is widely expected that the European Commission will provisionally increase import tariffs on electric vehicles from China to between 20% and 25% from the standard level of 10% for imports from third countries.”
While these margins are not as high as those deployed in the United States, they represent progress in a larger global effort to counter China’s massive excess capacity. They’re producing far more vehicles than they need.But the Wall Street Journal reportThe Chinese government “continues to support companies such as Zhidu and authorities are encouraging unprofitable automakers to continue production,” it said. Promoting economic growth, Maintaining employment and Expanding China’s role “In the global electric vehicle business”
Individual countries imposing tariffs is merely a Band-Aid on a much bigger wound. Chinese imports are not yet entering the U.S. market, but the threat remains because China believes it is profitable to mass-produce cars and dump them on other countries’ markets at exorbitant prices. The only way China can stop this is if enough countries respond in a coordinated manner to make it unprofitable for China to continue.
Given that the US and EU are the world’s two largest markets, their imposition of tariffs appears to be a step forward in an overall effort to counter Chinese overcapacity.
But even at this late hour, it’s still unclear whether tariffs will go ahead. report On Tuesday afternoon, Germany launched a last-minute attempt to suspend the tariffs, but France is leading the charge to increase them.
“Paris and Berlin are stepping up lobbying as the European Commission’s decision looms, but they are at odds over how tough von der Leyen should be on Beijing,” Politico reported. “The EU chief is expected to notify Chinese EV makers on Wednesday of the temporary tariffs resulting from an investigation into unfair state subsidies. EU member states will then vote this fall to approve the tariffs, making it crucial that von der Leyen raises them to a level acceptable to the EU’s two biggest powers.”
Germany’s hesitation appears to stem from German automakers’ large presence in China — “BMW, Audi and Mercedes-Benz sell 19.2 million vehicles in China, accounting for 30-40 percent of each automaker’s global sales,” according to Politico — but France is fighting for higher tariffs.
“France lobbied hard for the investigation; von der Leyen announced it in her annual address last fall,” Politico reported. “And France wants to significantly raise tariffs on Chinese-made EVs, despite China threatening to retaliate against French cognac makers with an anti-dumping investigation.”
We will be watching closely to see what the EU announces this week and what happens over the coming months.
