Welcome to the 215th edition of Trade War.
The EU slaps tariffs on Chinese electric vehicles but many manufacturers already have contingency plans in place. Dairy, pork, brandy, luxury goods, and critical minerals all possible targets for Beijing’s retaliation. And while low-priced EVs challenge global industries, steel and solar panels exports from China keep getting cheaper too.
Premier Li Qiang arrives in Adelaide, fresh from New Zealand, declaring that ties with Australia are “back on track.” Just how powerful is Li, China’s deferential, but officially number two leader? And Xi Jinping faces derision after asking why China doesn’t have more unicorns, or $1 billion-valuation startups.
Notable/In depth
“China’s real power has increased dramatically. But China’s mentality hasn’t kept up with the change,” says Peking University professor Jia Qingguo
China makes further inroads into Latin America with massive Peruvian port
US playing less central role in Indo-Pacific
EU slaps new tariffs on Chinese EVs
As expected, the European Union on Wednesday slapped new tariffs on Chinese-manufactured EVs, up as much as 38 percent more, from 10 percent before, affecting companies from BYD and NIO to SAIC and Tesla.
The move caught no one by surprise however, least of all the affected companies. While some Chinese EV makers have already started expanding factories in Europe (BYD, Chery, and Leapmotor), others plan to export to the continent from third countries like Thailand (SAIC), both moves allowing them to evade the new tariffs. Others have decided instead to withdraw from the European market and focus elsewhere (Great Wall), reports the Wall Street Journal.
A key point to keep in mind—this hardly signals a retreat for most of China’s ambitious EV players: As China’s economy slows and EV makers engage in a vicious price war at home, continued overseas expansion remains an essential part of their strategy.
“This is not a black swan event,” says AlixPartners Yichao Zhang. “The overall direction for Chinese carmakers in the new automobile era is still unchanged.”
“Distorts global automotive industrial and supply chains”
The European Union move to levy new tariffs “undermines the legitimate rights and interests of China's EV industry, but also disrupts the cooperation between China and Europe in the field of new energy vehicles and distorts global automotive industrial and supply chains, including those in the EU,” China Ministry of Commerce spokesperson He Yadong said in a press briefing, calling it also “blatant protectionism.”
Read the whole response from China’s Ministry of Commerce.
“Whole point of trade and industrial policies”
“[China’s Ministry of Commerce] is right about how these duties will disrupt and distort the global automotive industrial and supply chains, but that's the whole point of trade and industrial policies.
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