China's Concerns over EU's Increased Tariffs on Chinese Electric Vehicles - Potential Retaliatory Tariffs to Impact European Dairy and Pork Industries

EU's Decision to Increase Tariffs on Chinese Electric Vehicles

The European Union (EU) has decided to increase countervailing duties on Chinese electric vehicles by up to 38%. This is a countermeasure against the Chinese government's subsidies for the electric vehicle industry and aims to protect European electric vehicle manufacturers.

The main points are as follows:

• Imposing a 17.4% tariff on BYD, 20% on Geely, and 38.1% on SAIC
• Imposing a 21% tariff on Chinese companies that cooperated with the investigation and 38.1% on those that did not
• A provisional tariff imposed in addition to the existing 10% import tariff
• Provisional tariffs to be applied from July 4th, with final tariffs to be confirmed from November

China's Rebuttals and Retaliatory Threats

The Chinese government strongly condemned the EU's decision, calling it "naked protectionism." Foreign Ministry spokesperson Mao Ning warned that "China will take all necessary measures to safeguard its legitimate rights and interests."

In particular, Chinese media are mentioning the possibility of retaliatory tariffs on EU agricultural products, especially the dairy and pork industries. China had already launched an anti-dumping investigation into EU brandy imports in January.

Concerns of the European Dairy and Pork Industries

The European dairy and pork industries are expressing concerns about China's retaliatory tariffs.

• China is the second-largest export destination for EU dairy products, accounting for 36% of EU dairy product exports in 2023.
• Major dairy producing countries such as the Netherlands, France, Germany, Ireland, and Denmark have a high dependence on the Chinese market.
• China is the world's third-largest pork importer after Spain, Brazil, and the US. [5]

The European dairy and pork industries are expected to suffer significant losses if they lose the Chinese market.

Opposition from Some Member States, Including Germany

Some EU member states, including Germany, Hungary, and Sweden, have expressed their opposition to the tariff increase.

• German Transport Minister Volker Wissing criticized the move, stating that "it will harm German companies and key products."
• Hungary is preparing to build a factory for the Chinese company BYD, and Geely's subsidiary Volvo is a Swedish company.
• Hildegard Müller, President of the German Association of the Automotive Industry (VDA), argued that "improving the European manufacturing environment is more important than tariffs."

Future Prospects and Implications

Some believe that the possibility of an all-out trade war between the EU and China is low. [2][8] However, there are also concerns that the conflict could escalate due to mutual retaliatory tariffs.

This incident has become an opportunity to observe the conflict between pro-China and anti-China factions within the EU. It also highlights the conflicting interests of EU member states regarding the future of the European automotive industry.

As a result, the European agri-food export industry is likely to be severely impacted. The dairy and pork industries, which have a high dependence on the Chinese market, are expected to suffer the most.