Tariffs on electric vehicles: how would China respond?
11 JUL, 2024
By Donny Kranson
Tariffs on electric vehicles may trigger responses from China. A full-scale trade war is unlikely to break out, but we can expect to see some scuffles. China has already shown what its initial response is likely to be, targeting cognac, as France is behind the increase in tariffs on electric vehicles. Perhaps the Remy Cointreau company is the most exposed. China has also threatened Europe's agricultural and aerospace sectors. Farmers are an important voting bloc, while China is a major buyer of Airbus aircraft.
But realistically, nothing is that simple. Take the example of Airbus. Its biggest competitor is Boeing, on which China has imposed sanctions for selling arms to Taiwan. There is also talk of raising taxes on imported German cars, but for these companies, most of their cars for the Chinese market are already made locally. Luxury goods may be subject to sanctions. The top end would be the most protected, as their customers can purchase the products more easily when they travel or, frankly, ignore the higher tariffs and pay a high price.
The EU is one of China's main trading partners, which has always had a large and growing trade surplus with Europe. It is not in China's interest for this to turn into a full-blown trade war, especially with a weak Chinese economy.
