Spain’s Economy Minister, Carlos Cuerpo, has issued a stark warning about the potential consequences of an escalating trade dispute between the European Union and China, Bloomberg reports.
He has emphasized the need for continued dialogue and negotiations to avoid a “lose-lose” situation for both economies.
“We need to keep on negotiating, to keep all avenues for dialogue open to find a negotiated conclusion which is actually valid for both parties,” Cuerpo said. “It’s important not only in terms of being able to protect a key strategic sector going forward, but also thinking medium-term to avoid an escalation of protectionist measures.”
The EU and China, the bloc’s third-largest trading partner, are currently engaged in a tense trade standoff. Both sides have indicated a desire to avoid a full-blown trade war and stay within the rules of the World Trade Organization, but escalating tariff threats and countermeasures continue to cast a shadow over their relationship.
Cuerpo’s comments come in the wake of China’s recent announcement that it is considering increasing duties on European-made gasoline cars with large engines. This follows Beijing’s decision to impose a 39% deposit on EU brandy importers in retaliation for EU tariffs on Chinese electric vehicles (EVs).
These measures have had a tangible impact on businesses. French brandy producers are feeling the brunt of the Chinese deposit, and Chery Automobile Co., a Chinese carmaker, has delayed its planned EV production start in Spain by a year, to October 2025.
The EU, facing a divided internal consensus on its stance towards China, is caught in a difficult position. While recognizing the need for a “multilateral rules-based order,” the bloc also needs to “avoid being naive” according to Cuerpo.
The current trade spat erupted after the EU decided to increase tariffs on Chinese EVs, arguing that manufacturers unfairly benefit from state subsidies and flood the European market. The US already has high tariffs on Chinese EVs, making the European market particularly important for China’s auto industry.
Last month, Spain’s Prime Minister Pedro Sanchez publicly called for a reconsideration of the EU’s decision on new EV tariffs, prompting Germany’s Chancellor Olaf Scholz to echo his stance.
Adding further complexity to the situation, the Chinese government has launched anti-dumping investigations into EU exports of dairy and pork products, posing a significant threat to Spain, a major exporter of pork.
