From NOT A LOT OF PEOPLE KNOW THAT
By Paul Homewood
It did not take a genius to work out that EU tariffs on Chinese EVs would quickly turn into a full scale trade war
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Few industries are as susceptible to the shifting sands of international policy on trade and protectionism as the automotive sector. And never more so than now with the transition to electric vehicles (EVs).
In leading from the front in their determination to phase out the internal combustion engine (ICE), policymakers in both Britain and Europe have got themselves into the most terrible mess.
Home-grown manufacturers have been left woefully uncompetitive against rampant Chinese competition, with hundreds of thousands of relatively well-paid jobs in Europe’s industrial heartlands now at high risk of redundancy.
Across the sector, vehicle manufacturers are warning of plunging profits, factory closures and job losses; a perfect storm of negatives is about to break, and one which with their lofty net-zero ambitions is almost entirely of the politicians’ own making.
For the Government, two related issues have come racing into view. Ministers might even find time to address them if they could for just a moment stop running around like headless chickens spouting platitudes on how terrible their economic inheritance is.
One is whether to follow the US and Europe into imposing swingeing tariffs on Chinese EV manufacturers before they entirely wipe out the Continent’s own legacy automotive companies.
And second, whether to persist with punishing mandates that the industry hasn’t a prayer of meeting for phasing out petrol and diesel vehicles and replacing them with shiny new all-electric alternatives.
Both on price and quality, European car manufacturers are streets behind their upstart Chinese competitors on EVs, yet the EU plans to go all electric by 2035 and is committed to heavy fines against companies that don’t meet thresholds for phasing out ICE models in the meantime.
Imposing tariffs might theoretically give Volkswagen, Stellantis and their like time to play catch up. That they ever will is obviously open to question, but regardless the European Commission has moved ahead with protections including provisional additional tariffs on Chinese producers ranging from 17pc for BYD to 36.4pc for SAIC.
Exquisitely, the level of punishment is linked to the degree of cooperation shown in the EU’s preceding nine-month anti-dumping investigation.
As on virtually everything of importance, Europe is furiously divided over the matter. Retaliatory action against EU member countries with big export markets in China is a certainty. A full-scale trade war, with damaging consequences for industries completely unrelated to autos, is threatened.
Things were due to come to a head this week, when EU member states were scheduled to decide, using qualified majority voting, on whether to make the new tariffs permanent.
At the time of writing, it didn’t look as if those opposed to the tariffs – which included Germany, Hungary and Spain – had sufficient support to be able to block them. Attempts to reach a negotiated settlement with China involving voluntary quotas also seemed to have stalled.
Barring a last-minute deal – or alternatively one of Europe’s major economies changing its mind – it seems likely that the tariffs will take formal effect, leaving the UK with the awkward choice of whether to follow suit.
https://www.telegraph.co.uk/business/2024/09/25/should-be-welcoming-chinas-ev-manufacturers
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