China signals retaliation against EU’s tariff-hike plans – Politico
China’s Commerce Ministry has warned that it will retaliate if Brussels goes ahead with plans to slap tariffs on Chinese-made electric vehicles (EVs), according to Politico, citing a letter sent to the EU trade chief.
Chinese EVs are sold in the EU at considerably lower prices than their European counterparts, a gap that Brussels attributes to the financial assistance the Chinese government provides to domestic firms.
The value of EU imports of Chinese EVs surged to $11.5 billion in 2023, from just $1.6 billion in 2020, accounting for 37% of all EV imports to the bloc, according to the research firm Rhodium Group.
Last September, the European Commission launched an anti-subsidy investigation that could result in additional tariffs to offset the suspected use of state aid. The EU currently applies a 10% levy on all imported EVs.
According to the outlet, the Chinese Commerce Ministry has sent a five-page letter to EU trade chief Valdis Dombrovskis expressing “annoyance” with the probes and urging for a reset to avoid a further escalation. The EU is expected to announce provisional tariffs on Chinese electric vehicles in the coming days.
In the letter China warned the EU of retaliation, saying it would “start” with aviation and agriculture, the outlet said, citing a source familiar with the document.
Hitting agriculture could deal a blow to the EU, as China is the third-largest consumer of the bloc’s agriculture output. The bloc’s exports to the Asian country amount to 6.4% of its total agri-food trade, according to Politico. The aviation measures could hit European aircraft manufacturer Airbus, the largest supplier to the Chinese market, the article noted.
A spokesperson for the European Commission confirmed to the outlet that Dombrovskis had received the letter, adding: “we are working on a reply.”
On Thursday, the Chinese Foreign Ministry urged the EU to stop the investigation, warning that if it continues “China will not sit back and watch.”
“We will take every necessary measure to firmly safeguard our lawful rights and interests,” the ministry’s spokesperson, Mao Ning said.
Earlier, Beijing said it would retaliate against any tariffs with duties on products such as French brandy, and wine and dairy products from the EU.
It’s not yet clear what level of import duties the EU would impose, but some analysts expect they could range between 15-30%, while others say they could be as high as 50%.
