Introduction

Two days have passed since the EU announced the imposition of outrageous anti-subsidy tariffs of up to 38.1% on Chinese electric vehicles.

During these two days, the reactions from all parties have been extremely strong, even surpassing the level when the US announced a 100% tariff on Chinese new energy vehicles last month.

For details of the incident, please refer to my previous article titled "Imposing Anti-Subsidy Tariffs on Electric Vehicles for China? The EU is Really in a Hurry This Time". Next, let's focus on the responses from various parties and China's countermeasures.

Responses from Various Parties

Among EU member states, Germany, Hungary, Sweden, and other countries have immediately expressed opposition.

A spokesperson for the German government expressed opposition, stating that we do not need more trade barriers.

The Hungarian Ministry of Foreign Affairs and Trade issued a statement saying that Hungary opposes the EU's imposition of punitive tariffs on Chinese electric vehicle manufacturers.

Apart from politicians, German automakers and business associations have also come forward to oppose it.

What is China's stance?

Officially, a spokesperson for the Ministry of Commerce also stated that China will resolutely take all necessary measures. The spokesperson pointed out that China urges the EU to immediately correct its wrong practices, effectively implement the important consensus reached during the recent trilateral meeting between Chinese, French, and European leaders, and properly handle economic and trade frictions through dialogue and consultation. China will closely monitor subsequent developments in the EU and resolutely take all necessary measures to firmly defend the legitimate rights and interests of Chinese enterprises.

Chinese automakers involved in export business have been significantly affected by these tariffs, and automakers represented by SAIC Motor have also come forward to oppose it.

Why does the EU's imposition of tariffs on Chinese electric vehicles have such a significant impact?

Last month's 100% tariff on electric vehicles in the US did not initially cause much of a stir, but why is the EU's 38.1% tariff being taken so seriously today?

Let's talk about the US first

Our exports of new energy vehicles to the US are almost zero.

Therefore, the US's imposition of tariffs on us has little impact on us, as we currently have no exports. At most, it may have some impact on the future layout of new energy vehicles in the US. You can refer to the author's previous article for more details.

Moreover, given the US's consistent style and attitude towards China, it is expected that they would do something like this to suppress China. There have been far worse things than this.

The EU is completely different

First, in terms of the market, China's exports of new energy vehicles to Europe have been very considerable in recent years, and the trend has been good. In 2023, Chinese automakers (excluding Tesla) exported 220,000 vehicles to Europe, while Tesla is expected to export 150,000 to 200,000 vehicles. The vast majority of China's new energy vehicle exports to Europe are pure electric vehicles. Such a large market in Europe, if it adopts such an attitude towards Chinese electric vehicles, will severely hit the development of China's new energy vehicle industry exports.

Secondly, in terms of China-EU relations, this matter is also somewhat outrageous. The EU's attitude towards China has actually been a rather ambiguous state. Since realizing the importance of the Chinese market in 2010, its attitude towards China has been relatively positive. However, due to pressure from the US, it dare not openly show favor.

Europe has always tried to navigate smoothly between China and the US, offending neither side.

Although Germany and France have different stances, it is obvious that the hawkish faction represented by France has gained the upper hand this time, following the US's footsteps in imposing tariffs on Chinese electric vehicles, effectively tearing up the relationship with China.

In the global green transformation process, the EU has always touted itself as a "pioneer." However, the EU's decision to impose tariffs on Chinese electric vehicles will not only hinder its automotive industry's transformation but also slap itself in the face.

On the one hand, it wants to establish a "green transformation" image, urging consumers to switch to electric vehicles; on the other hand, it strictly guards against and prevents the entry of cost-effective electric vehicles into Europe.

It really wants both!

What countermeasures may China take?

Internationally, mere opposition is often ineffective.

It's like when you're being beaten, and you still try to reason with the other person; you'll only be ignored! Only by bravely fighting back and making the other person feel pain will they be willing to sit at the same negotiation table with you.

The government has already stated that it will "take all necessary measures," and this is not just empty talk. Let's explore a few possible ways.

1. Impose equivalent tariffs on European imported cars?

If we impose equivalent tariffs on cars imported from Europe, it will definitely have an impact on their automotive industry, with Germany being the most affected.

The Chinese market is crucial for German automakers, as China is the largest single market globally for BMW, Mercedes-Benz, and Volkswagen. Data shows that in 2023 alone, China contributed 32% of BMW's global sales, reaching 824,900 units; Mercedes-Benz accounted for 36% of its sales in the Chinese market, while more than one-third of Volkswagen's sales came from China, approximately 3.2 million units.

Therefore, it is Germany that has clearly come forward to oppose it.

France, whose automotive industry is not that strong, actually supports this tariff increase. Because France's most important export to us is no longer cars but its luxury goods.

If we implement reciprocal auto tariffs, frankly speaking, it will have no significant impact on France.

Therefore, this reciprocal countermeasure may have a greater impact on Germany, but its effect on the entire Europe is quite limited.

2. Impose tariffs on European luxury goods?

Since France and others mainly export luxury goods to China, can we consider increasing import tariffs on European luxury goods?

The answer is no.

For Chinese people, the most important value of luxury goods lies in the symbol of status behind their high prices. Once tariffs are imposed, the sales prices of luxury goods will increase, which will instead enhance their role as an "expensive" status symbol.

Unlike daily consumer goods, the more expensive a luxury good is, the more people buy it. Such an operation may actually reversely promote its sales, making it more favorable for them.

If we really impose tariffs on luxury goods, we would fall into their trap, which France and others may welcome.

3. Refine the classification of EU goods and implement precise countermeasures

Simply increasing tariffs on cars has limited effects; increasing tariffs on luxury goods is even more ineffective.

If we can subdivide the categories of imported EU goods, classify EU goods based on various criteria such as origin, carbon emission standards, subsidy methods, and chemical substances contained, and impose tariffs on certain segmented products, we can better achieve precise countermeasures.

For example, France is very active in imposing tariffs on Chinese electric vehicles in the EU. China can impose tariffs on EU agricultural products, wine, and other goods exported to China. With a series of combined measures, we can try to encourage the EU to retreat.

Conclusion

The EU has sounded the horn of the trade war, and China will not sit idly by!

We advocate win-win cooperation, but we are also not afraid to retaliate.