As China seeks resolution through the World Trade Organization (WTO) regarding the European Union’s tariffs on its electric vehicles (EVs), analysts believe that the ongoing trade spat is unlikely to escalate significantly, CNBC reports.
This perspective comes as China’s commerce ministry announced on Monday that it had filed an additional appeal with the WTO, following unsuccessful bilateral discussions aimed at resolving the issue.
The EU recently implemented tariffs of up to 45.3% on Chinese EVs after a year-long investigation into trade practices. In response, China has taken a cautious approach, with experts noting that while it aims to demonstrate its strength, it also seeks to avoid excessive confrontation. Shaun Rein, managing director of China Market Research, described the filing as a “warning shot” to Europe, emphasizing China’s desire to maintain stable economic relations despite rising tensions, particularly with the US.
The ongoing tariff dispute comes at a time when both parties are exploring alternatives, such as setting minimum price commitments for Chinese automotive producers, which could serve as a compromise to mitigate the impacts of the tariffs. In 2023, the EU accounted for over 40% of Chinese EV exports, highlighting the significant trade interdependence between the two regions.
Industry experts anticipate that China will make substantial efforts to find common ground with the EU. Sam Radwan, CEO of Enhance International, expressed optimism that the dispute will not escalate to the levels seen in US-China trade tensions, where the US has imposed 100% tariffs on Chinese EVs. He pointed out the EU’s reliance on Chinese components within the electric vehicle value chain as a key factor in seeking a balanced resolution.
European officials have acknowledged the challenges posed by trade relations with China. Maros Sefcovic, vice-president of the European Commission, referred to China as the “most challenging trading partner” for the EU and stressed the need for a more assertive stance in addressing structural imbalances and unfair practices. However, Sefcovic reassured that the EU is not interested in engaging in trade wars but rather in rebalancing its relationship with China.
The EU’s new tariffs prompted Beijing to retaliate by targeting European exports, including pork and dairy products. Meanwhile, reports surfaced that China had instructed its automakers to reassess significant investment plans, discouraging investments in European countries that supported the tariffs while encouraging them to consider investments in nations that opposed such measures.
In a recent meeting, China’s commerce minister Wang Wentao urged French officials to facilitate a solution that would be acceptable to both sides. French junior trade minister Sophie Primas reiterated that while the EU intends to maintain trade relations with China, it will not concede on crucial points of contention.
