Did Europe just start a trade war with China over electric cars?
European Union may have just sparked one of its biggest battles.
With European officials fearing millions of auto jobs are at risk from China’s surging electric vehicle exports, the bloc’s executive arm on Wednesday launched an investigation into Beijing’s financial support for the EV industry.
The probe, which could take up to nine months, will probably lead to new EU tariffs on Chinese EV imports and embroil major non-European automakers like Tesla Inc., which produce cars in China for export to the bloc.
The move may lead to tariffs close to the 27.5% level already imposed by the US on Chinese EVs, according to a person familiar with the matter. The EU duties could vary depending on the producer, the person added, asking not to be identified as the discussions are private and no decision has been finalized.
The bloc’s investigation, as well as aggressive moves by Washington to counter China, are part of a broader rethink by governments in developed economies to bring production closer to home, especially for key sectors like semiconductors, pharmaceuticals and heavy industries, which were disrupted during the Covid-19 pandemic.
That drive to secure supply chains, combined with the tensions after Russia’s invasion of Ukraine, has resulted in a simultaneous rush to throw up trade barriers, triggering fears of a global economic fragmentation.
Major Market
If the EU does impose duties, that would curtail one of the last major markets for Chinese EV exports, and raises the prospect of a cascade of defensive moves in places like the UK to protect their markets being flooded by vehicles redirected from the EU.
Shares of Chinese electric vehicle makers staged a mix performance Thursday with BYD Co Ltd.
