not many people know
Paul Homewood
It doesn’t take a genius to figure out that EU tariffs on Chinese electric cars will quickly turn into a full-blown trade war
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Few industries are as vulnerable to changes in international trade and protectionist policies as the automotive industry. With the transition to electric vehicles (EVs), this is even more true than now.
British and European policymakers were plunged into the most horrific confusion when they took the lead in deciding to phase out the internal combustion engine (ICE).
Local manufacturers have been left behind Very uncompetitive compared to fierce competition in ChinaHundreds of thousands of relatively well-paid jobs in Europe's industrial heartland are now at high risk of being laid off.
Automakers across the industry are warning of plummeting profits, factory closures and job losses; a perfect storm of negativity is about to erupt, one that is almost entirely of politicians’ own making with their lofty net-zero ambitions.
For the government, two related questions have arisen. If ministers could stop running around like headless chickens for a while, they might even find time to address these issues gush about how horrific their economic legacy is..
One is whether to follow the U.S. and Europe's lead and impose steep tariffs on Chinese electric car makers before they completely wipe out the continent's traditional car companies.
Secondly, whether to adhere to the punitive directives that the industry has yet to pray for Phase out petrol and diesel vehicles And replace them with shiny new all-electric alternatives.
European carmakers lag far behind emerging Chinese rivals in electric vehicles, both in terms of price and quality, but the EU plans to go all-electric by 2035 and has pledged to phase out ICE models in Europe if it does not meet the threshold. companies were fined heavily.
In theory, imposing tariffs could give companies like Volkswagen, Stellantis and others time to catch up. Whether they will do so is obviously up for debate, but regardless, the European Commission has already introduced protective measures, including imposing temporary additional tariffs on Chinese producers, at 17% for BYD and 36.4% for SAIC.
Cleverly, the level of punishment is tied to the level of cooperation shown in the EU's previous nine-month anti-dumping investigation.
As on almost everything that matters, Europe is deeply divided on this issue. Retaliatory actions against EU member states where China has a huge export market are certain. A full-blown trade war could have devastating consequences for industries that have nothing to do with cars.
Matters will come to a head this week, when EU member states plan to use qualified majority voting to decide Whether to make new tariffs permanent.
As of this writing, countries opposed to the tariffs, including Germany, Hungary and Spain, do not appear to have enough support to stop them. Attempts to reach a negotiated solution with China involving voluntary quotas also appear to have stalled.
Barring a last-minute deal – or one of Europe's major economies changing its mind – the tariffs are likely to come into effect, leaving the UK with the awkward choice of whether to follow suit.
https://www.telegraph.co.uk/business/2024/09/25/should-be-welcoming-chinas-ev-manufacturers
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