A step back from the EU on duties on Chinese electric cars. This is the request of the Spanish Prime Minister Pedro Sanchez made during the summit between Spain and China underway in Shanghai. Addressing both the member states and the European Commission, the Socialist leader hoped to “reconsider” the plan to impose additional duties of up to 36.3% on imports of Chinese electric vehicles. Beijing’s strategy of hitting Chinese imports in the meat and dairy sectors is starting to produce its effects and could cause the Brussels plan to creak, aimed at protecting a European car industry that is now in an “alarming” situation, as admitted by Volkswagen itself.
China’s Retaliation Against Spanish Pork
Pedro Sanchez’s message comes after Beijing retaliated by immediately launching an anti-dumping investigation into imports of pork and pork products, of which Spain is the largest European exporter to China. With more than 560,000 tons exported last year, the total value of trade was 1.2 billion euros, according to data released by Interporc, the industry’s professional organization.
Beijing’s Countermove After Tariffs on Chinese Electric Cars
Beijing’s move has had its effects given the widespread concerns in the sector. Sanchez then tried to reassure Chinese interlocutors by sending a message. “As I said before, we do not need another war, a trade war in this case,” the prime minister clarified. He also announced that he had expressed to Chinese President Xi Jinping his “surprise” at Beijing’s choice of the pork sector as a response.
Tariffs to protect the European automotive sector
The decision to impose a five-year surcharge on electric cars from China was announced by Brussels on August 20. Special measures are planned for vehicles produced by non-Chinese companies, but which have their base in Xi Jinping’s country, such as cars from the American manufacturer Tesla which has a factory in Shanghai. In addition to the 10% tax already in force, the EU executive will add a surcharge, which could reach up to 36%, in order to “punish” imports of Chinese electric vehicles.
Under the plan, the tariffs will come into force by the end of October and will last for five years. The proposal will have to be approved by the governments of the 27 member states, however. EU heads of state will soon be called to vote, but there are deep divisions on the issue. If the tariffs are approved, they will replace the provisional taxes decided at the beginning of July, which the Commission says will rise to 38%.
The slow death of European cars
The EU executive’s strategy is in extremis, aimed at safeguarding a dying European automotive industry, which is struggling to make the transition from combustion engines to electric and feels pressured by competition from Chinese companies, the latter capable of producing and selling their models at much more competitive prices. While Beijing has invested rapidly in batteries, European automotive companies are struggling to free themselves from petrol and diesel engines, the sector in which they have been leaders for decades.
With these surcharges, Brussels hopes to protect a sector that employs 14.6 million workers in Europe. The tariffs on electric vehicles are part of a broader set of trade tensions between Western countries and China, accused of destroying competition in various sectors: from wind turbines to solar panels to clothing. On the other hand, the Asian country remains the EU’s main economic partner after the United States and entering into an open conflict would be very risky.
Spain’s Business with China
Sanchez assured that Spain intends to be “constructive” in its relations with Beijing and that it will work to find a “compromise between China and the European Union”. The Spanish Prime Minister aims to strengthen its relations with the Chinese superpower. He has already achieved some results during his visit to Shanghai. On September 10, the government of Madrid said it had signed an agreement with the Chinese company Envision Group. As reported by Reuters, the company will be involved in building a $1 billion plant to produce machinery used to produce green hydrogen.
Under the memorandum of understanding, Envision will begin building the factory that will produce electrolyzers (the machines that separate hydrogen from water) by June 2026. The Chinese company said it will finance the project with private partners at a site in Spain, the destination of which has yet to be announced.
