BEIJING (Reuters) – With a vote on EU tariffs on Chinese-made electric vehicles looming, Beijing has used a carrot-and-stick approach to dealing with the bloc, threatening trade retaliation as it tries to persuade major EU states to hold individual talks on deals and investments.
The potential impact of counter-tariffs on EU goods will fall mainly on countries such as Spain, France and Italy which have expressed their support for duties on electric vehicles, while exports of pork, dairy products and brandy to the world’s second largest economy are at stake.
EU members such as Germany, Finland and Sweden, which did not push for tariffs, would be less affected, as they have little exposure to the export items identified by China.
China’s tactic appears to be working.
Spanish Prime Minister Pedro Sanchez ended his visit to China this week by sitting in a Chinese electric car and saying it was an “honor.” He then unexpectedly called on the EU to reconsider its position.
According to a Spanish government source, Sanchez’s delegation returned home with the feeling that “Spain is more important now” and that an agreement on tariffs on pork products is close.
As an incentive, a Chinese company has agreed to build a $1 billion plant in Spain to build machinery used to produce hydrogen, a move that appears to back Spain’s green ambitions.
With pork and dairy products, China maximizes the “domestic political cost” for countries voting to impose EV tariffs, said economist Mei Xinyu, as the agricultural sector often plays a role in EU policies.
“These products count on China as one of the major export markets,” he said.
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The EU’s pork, dairy and brandy exports to China amounted to around $10 billion in 2023, although not all products in these categories would be subject to tariffs. Last year, the bloc’s exports to China exceeded $280 billion.
CRITICAL MOMENT
Still feeling the brunt of Trump-era US tariffs, China does not want a trade war with the EU. But Beijing has made it clear it will fight if Brussels imposes additional tariffs on electric vehicles of up to 35.3%.
Chinese-made electric vehicles exported to Europe rose 38% in 2023 to 656,000 units, including shipments to third countries. Last year, more than 40% of electric vehicles shipped from China were exported to Europe, according to Reuters calculations based on data from the China Passenger Car Association.
Chinese Commerce Minister Wang Wentao will visit Europe next week and hold talks with EU Trade Commissioner Valdis Dombrovskis.
Wang will also visit Italy, which supports tariffs on electric vehicles while also seeking Chinese investment to build EV manufacturing capacity.
China needs at least 15 EU members representing 65% of the European population to oppose tariffs in the October vote.
Yet positions within the EU remain diverse. Some smaller states are keeping their heads down. Others are prioritizing ties closer to their borders.
“Irish exports to China are only a small part (of its exports), so Ireland will prioritise the EU market and relations with Europe rather than China,” said an Irish trade representative in China, speaking on condition of anonymity.
“China is still important, but business with China is difficult and not growing as expected.”
Ireland is the fifth most exposed EU producer in the Chinese dairy survey and the sixth in the pork producer ranking.
(Translated by Chiara Scarciglia, edited by Sabina Suzzi)
Table of Contents
EU Tariffs on Chinese Electric Vehicles: A Threat to Trade Relations?
The European Union’s (EU) impending vote on tariffs on Chinese-made electric vehicles has sparked a tense trade dispute between the two economic giants. China, employing a carrot-and-stick approach, has threatened trade retaliation while trying to persuade major EU states to hold individual talks on deals and investments. The potential impact of counter-tariffs on EU goods will fall mainly on countries such as Spain, France, and Italy, which have expressed support for duties on electric vehicles, putting their exports of pork, dairy products, and brandy to China at stake.
New Tariffs on Chinese Electric Vehicles
Recently, the EU has imposed tariffs on Chinese electric vehicles, ranging from 17.4% to 37.6%, in addition to a 10% duty already in place [[1]][[2]]. This move has led to a sharp response from China, which has threatened to retaliate with tariffs on EU goods, particularly from countries that have supported the imposition of duties on electric vehicles.
China’s Carrot-and-Stick Approach
China’s tactic appears to be working, as demonstrated by Spanish Prime Minister Pedro Sanchez’s unexpected call to reconsider the EU’s position on tariffs after a visit to China. Sanchez’s delegation returned home with a sense of optimism, feeling that Spain is more important now, and that an agreement on tariffs on pork products is close. China has also agreed to build a $1 billion plant in Spain to produce hydrogen, a move that supports Spain’s green ambitions.
Counter-Tariffs on EU Goods
China has identified EU exports of pork, dairy products, and brandy as potential targets for counter-tariffs, which could have a significant impact on countries like Spain, France, and Italy. According to economist Mei Xinyu, China is maximizing the “domestic political cost” for countries voting to impose EV tariffs, as the agricultural sector often plays a role in EU policies.
EU-China Trade Relations
The EU and China have a significant trade relationship, with bilateral trade reaching €739 billion in 2023, making China the EU’s second-largest trading partner after the United States [[3]]. While China does not want a trade war with the EU, it is clear that Beijing will fight if Brussels imposes additional tariffs on electric vehicles of up to 35.3%.
Critical Moment
The upcoming vote on EU tariffs on Chinese electric vehicles has reached a critical moment. Chinese Commerce Minister Wang Wentao will visit Europe next week and hold talks with EU Trade Commissioner Valdis Dombrovskis. Wang will also visit Italy, which supports tariffs on electric vehicles while seeking Chinese investment to build EV manufacturing capacity. China needs at least 15 EU members representing 65% of the European population to oppose tariffs in the October vote. However, positions within the EU remain diverse, and the outcome of the vote remains uncertain.
the EU tariffs on Chinese electric vehicles have sparked a tense trade dispute between the two economic giants. China’s carrot-and-stick approach has led to a shift in positions among EU member states, and the outcome of the upcoming vote remains uncertain. The impact of counter-tariffs on EU goods could have significant consequences for countries like Spain, France, and Italy, highlighting the need for a resolution that balances the interests of both parties.
EU Tariffs on Chinese Electric Vehicles: A Threat to Trade Relations?
The European Union’s (EU) impending vote on tariffs on Chinese-made electric vehicles has sparked a tense trade dispute between the two economic giants. China, employing a carrot-and-stick approach, has threatened trade retaliation while trying to persuade major EU states to hold individual talks on deals and investments.
New Tariffs on Chinese Electric Vehicles
Recently, the EU has imposed tariffs on Chinese electric vehicles, ranging from 17.4% to 37.6%, in addition to a 10% duty already in place [[1]][[2]]. This move has led to a sharp response from China, which has threatened to retaliate with tariffs on EU goods, particularly from countries that have supported the imposition of duties on electric vehicles.
**China’s Car
