Tariffs on Chinese EVs to 'backfire on Europe'

BRUSSELS — The European Union should seek cooperation with China instead of imposing punitive tariffs on Chinese electric vehicles, experts say.

Through collaboration and knowledge exchange with China, Europe can develop more technologically advanced electric vehicles, Mladen Plese, a Croatian expert on China and Asia, said in an interview with Xinhua.

"Cooperation with China is not only the best solution but also the only viable one, and the EU will continue to stagnate if it does not seek cooperation," Plese said.

High tariffs on Chinese EVs will not benefit the European EV industry, Plese warned, adding that European consumers will be "harmed most".

"The EU decision is harmful, above all, for Europe," Plese said.

The European Commission announced on Oct 4 that it passed a vote to impose punitive tariffs on Chinese battery electric vehicles, sparking criticism from several European countries and auto industries which warned the move could boomerang on EU competitiveness.

Though the Commission said it had secured necessary support from member states, 12 EU members abstained from the vote and five voted against the decision.

Plese, former editor-in-chief of Croatia's mainstream daily newspaper Jutarnji List, said the tariffs will not be able to slow down the development of Chinese EVs.

Plese described the EU's decision as "political" and criticized it for disregarding the interests of the European industry and economy. He pointed out that leaders of several major European automakers, including BMW, Mercedes and Volkswagen, have called for a negotiated solution.

"These are the people who lead the automotive industry in Germany and Europe. The EU should listen to them, as the policy of imposing the tariffs will ultimately backfire on Europe," Plese warned.

Imposing tariffs on Chinese-made electric cars is detrimental to Europe's auto industry and overall economic growth, said Stephan Ossenkopp, an independent political analyst and a research fellow at the Germany-based think tank Schiller Institute.

Burden for consumers

These tariffs will negatively impact European consumers by driving up prices, Ossenkopp said. Not only the cost of purchasing EVs imported from China will increase for EU buyers, but other automakers might also seize the opportunity to hike their prices to boost profits.

"Ultimately, European consumers will bear the financial burden of such protectionist measures," he said.

Healthy competition is essential for innovation and technological advancement, Ossenkopp said. Although the tariffs might temporarily create a "comfort zone" for European automakers by reducing competition in the market, they would eventually disrupt the electric vehicle supply chain and exacerbate the challenges faced by European automakers, because these companies benefit greatly from collaboration in EV supply chains and joint research and development initiatives with their Chinese counterparts.

The punitive tariffs "will harm EU citizens more than help them, and they will actually backfire on the European automotive industry", the Brussels-based economic think tank Bruegel said in a recent report.

The tariffs will insulate European producers from global competitive pressures and discourage them from developing integrated value chains with Chinese partners, the report said.

Furthermore, the tariffs represent another step toward the fragmentation of world trade, which will accrue economic costs and create uncertainties that will not spare the EU.

Trade disputes also tend to have spillover effects, and such disputes between the EU and China will strain the overall bilateral relations, the report said, noting it's not too late for the EU to change its mind.

China Daily - Xinhua