According to numerous economic researchers, the EU’s punitive tariffs on Chinese electric cars will cause imports from Asia to collapse, but significant price increases are not expected.
The tariffs will come into effect provisionally at midnight on Friday after Brussels and Beijing failed to reach an agreement in a dispute over the People’s Republic’s subsidies and trade practices. Provisional means that the duties will initially be demanded by customs as security. Whether they are then withheld will likely depend on whether a deal can be reached with China in the coming months.
EU member states must also agree to the rates so that they can actually be collected. Depending on the car manufacturer, the European Commission provides rates of 17.4 to 37.6 percent.
The economic research institute Wifo does not expect a major price effect. With increases of 0.3 to 0.9 percent on average, these should be rather small. The “effects could be greater in the short term,” according to the economic researchers in a current analysis that Wifo has prepared together with the Kiel Institute for the World Economy (IfW Kiel) and the Supply Chain Intelligence Institute Austria (ASCII).
Opportunity for European car manufacturers
The tariffs offer opportunities for European carmakers. “Value creation in the EU automotive industry is expected to increase by 0.4 percent, while in China it will decrease by 0.6 percent,” explains Julian Hinz, research director for trade policy at IfW Kiel. In general, economists expect the decrease in imports to be compensated by more sales by European manufacturers in the EU and, in some cases, by more imports from third countries.
Controversial measure
The tariffs on electric cars are considered controversial among economists and parts of the economy. There are fears of tough countermeasures from China. For example, there is the application of anti-dumping duties of 50 percent on pork deliveries from the EU. “That would be unpleasant for pig farmers, especially in Denmark, Spain and Germany. However, since exports have been falling sharply for several years, this measure will probably have only a minor impact on welfare in the EU,” Wifo estimates.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
