The EU imposed tariffs on the ground, and the related trade losses may reach 4 billion US dollars, and the impact of China's electric vehicles is geometric

Chengdu Business Daily Red Star News

2024-06-13 15:10Posted on the official account of Red Star News of Chengdu Business Daily, Sichuan

Red Star Capital Bureau reported on June 13 that yesterday, the European Commission issued a statement that it intends to impose temporary countervailing duties on electric vehicles imported from China from July 4.

According to the European Commission, from July 4, BYD, Geely Automobile and SAIC will impose tariffs of 17.4%, 20% and 38.1% respectively; A 21% tariff will be imposed on other manufacturers; Tesla vehicles imported from China may be subject to separate tax rates.

Red Star Capital Bureau noted that as of 12 noon today, BYD shares (01211.HK), Leapmotor (09863.HK), Geely Automobile (00175.HK), and Weilai-SW (09866.HK) rose 7.36%, 3.23%, 2.70%, and 1.31% respectively.

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There are two modes of electric vehicle trade disputes

A few days ago, an analysis report released by the Kiel Institute for the World Economy in Germany pointed out that if the EU imposes a 20% import tariff on Chinese-made electric vehicles, the number of Chinese-made electric vehicles imported by the EU will be reduced by a quarter, about 125,000, and the related trade losses will be as high as nearly 4 billion US dollars.

The Chinese Chamber of Commerce in the EU believes that the measure will impact the normal economic and trade exchanges between China and the EU in the automotive and related fields, and its "spillover effect" will bring challenges to China-EU economic and trade relations and bilateral relations.

According to a survey conducted by the Chinese Chamber of Commerce in the European Union, for most Chinese automakers, the imposition of tariffs of more than 10% by the European side is in the high range, which will have a direct negative impact on their exports to Europe. The current temporary tariff range of 17.4% to 38.1% means "severe barriers to market access".

Bai Ming, deputy director of the International Market Research Institute of the Ministry of Commerce Research Institute, told the Red Star Capital Bureau that the next trend of the electric vehicle trade dispute between China and Europe is likely to be two models.

One is that China will take countermeasures. "Germany's three major car companies, Mercedes-Benz, BMW, and Volkswagen, have all stated that they do not support the EU's tariffs on Chinese electric vehicles. These European car companies have a lot of space in China's stock market. If China chooses to retaliate, their lives will not be easy. Bai Ming believes that there are still more than 20 days of consultation, and if the European side insists on going its own way, then China will most likely take some countermeasures.

Bai Ming mentioned that the other is to reproduce the photovoltaic model of several years ago. The EU once wanted to impose anti-dumping and countervailing duties on Chinese-made photovoltaic products, but after communication between China and the EU, it was decided to adopt the "double limit" method of limiting prices and quantities to reach a consensus. However, Bai Ming believes that this time it is an increase in tariffs, and there is no basis for reaching a consensus on the "double limit", and there is no feasible plan yet.

The EU's decision provoked a strong reaction from all sides. Both the Ministry of Foreign Affairs and the Ministry of Commerce of China have stated that China will resolutely take all necessary measures to firmly defend the legitimate rights and interests of Chinese enterprises.

On the 12th local time, Hungarian Minister of Economy Nagy Marton said in a government statement that Hungary does not agree with the EU's tariffs on Chinese electric vehicles.

Norway's finance minister, Vedom, said that Norway, a pioneer in plug-in cars, would not join the EU in raising tariffs on Chinese electric vehicles.

The German Automobile Manufacturers' Association (VDA) said that the tariffs will hurt the European car industry and eventually lead to higher consumer prices, and German automakers know that this will have a huge impact on European cars exported to China.

On behalf of the Chinese business community, the China Council for the Promotion of International Trade and the China Chamber of International Commerce called on the European side to earnestly abide by WTO rules and immediately remove the countervailing measures on China's electric vehicles.

Experts suggest that Chinese companies integrate into Europe

Will Chinese automakers be able to maintain their competitiveness in the European market? Xue Xu, an associate professor at Peking University's School of Economics, said in a previous interview with Red Star Capital that if the EU launches a countervailing investigation, EV exports will be affected in the short term. "First of all, global inflation control has led to great uncertainty in the economic policies of various countries, and it is possible that demand will be suppressed to a certain extent in order to control inflation, or even decline, which cannot be ruled out." Xue Xu believes that once identified, it will affect the entire industry chain.

Xue Xu believes that from the perspective of the EU's overall economic and industrial interests, the EU's overall economy relies on the development of the Chinese market, and a lot of in-depth work can be done on the relationship between them.

VDA Chairman Hildegard Müller warned that so-called countervailing measures, such as additional tariffs, will not solve the challenges facing the European and German automotive industries, but will quickly have a negative impact. "The trade conflict would also jeopardize the EU's goal of promoting electric vehicles and moving towards digital transformation, and our business with China is currently providing a lot of jobs in Germany, and our companies are currently financing the transition at record amounts, also from China, a core sales market."

According to the data, the EU automotive industry directly or indirectly creates nearly 14 million jobs, accounting for 6.1% of the EU workforce. The potential impact on exporters is significant. In 2022, the EU exported $240 billion worth of goods to China, making China Europe's third-largest overseas market.

Cui Dongshu, secretary-general of the passenger association, said in an interview that the EU's launch of a countervailing investigation into Chinese-made electric vehicles will not delay the plans of Chinese automakers to invest in Europe. Chinese companies need to integrate into Europe, build an electric vehicle industry chain in Europe, bring more jobs to Europe, and promote the more sustainable and stable development of the entire Chinese industry chain in Europe.

Red Star News reporter Wang Tian

Edited by Yang Cheng

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