China retaliates against EU in escalating trade dispute

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【Summary】The EU plans to impose tariffs on Chinese brands like BYD, leading to a brewing dispute with China. European manufacturers argue that Chinese state support for Asian brands creates unfair competition. China has threatened retaliatory action, calling the investigation a protectionist act. The move follows pressure from the automotive industry, with European brands facing challenges from Chinese firms. However, not everyone agrees, with Mercedes warning that tariffs could be counterproductive.

FutureCar Staff Sep 15, 2023 9:17 AM PT

China retaliates against EU in escalating trade dispute

A major dispute is brewing between China and the European Union (EU) over proposed tariffs on Chinese automaker BYD and other similar brands. The EU is considering an "anti-subsidy investigation" to level the playing field for European manufacturers against their Chinese competitors. European Commission President Ursula von der Leyen has expressed concerns about cut-price Asian brands benefiting from state support in China, leading to a "race to the bottom" and distorting European markets.

In her annual state of the union address, von der Leyen emphasized that while Europe is open to competition, it does not want to see companies being undercut by cheaper alternatives. These statements have sparked anger from the Chinese government, which is now threatening retaliatory action. China's Ministry of Commerce has criticized the investigation as a protectionist act that will disrupt the global automotive industry and negatively affect China-EU economic relations.

The decision to launch an investigation follows pressure from the automotive industry, which has been struggling against an influx of new Chinese firms. Stellantis CEO Carlos Tavares has described the situation as a "terrible fight" and called for political assistance to address the challenges faced by European brands. However, not everyone agrees with the proposed tariffs. Mercedes believes that they would be counterproductive, while Volker Treier, head of trade at the German Chamber of Commerce and Industry, suggests tackling Chinese distortions of competition without excessive subsidies or punitive tariffs.