The reactions have been hailed after the EU threatened on Wednesday with an additional punitive duty on Chinese electric cars of up to 38.1 percent. The government was quick to say that we would not follow suit. The Chinese electric cars have rolled strongly into the European market. It is estimated that they make up around 8 per cent of the market in the EU, and as much as 15 per cent in Norway. According to the EU, the Chinese electric cars are around 20 per cent cheaper than the European models, writes Reuters. The EU believes this is so, among other things, because Chinese electric car manufacturers benefit from “unfair subsidiaries”, and believes this constitutes an economic threat for European electric car manufacturers. Now they have given different producers different duty rates, based on who they think has received the most subsidies and who has cooperated the most in the EU’s investigations into the matter. This is what the tariff rates look like for some of the companies: State-owned SAIC – which is behind the MG brand – risks the largest punitive tariff, at 38.1 per cent. Geely, which owns Volvo, risks a tariff of 20 per cent. Build your dream (BYD), which is the largest player in China, risks the least punitive tariff, at 17.4 per cent.Punit Paranjpe/Pedro Pardo/Focke Strangmann/AFP What are the reactions in Europe? But the move, which aims to protect European companies, has caused the same companies to react negatively. Both Volkswagen, Mercedes-Benz and BMW believe that a punitive tariff is not the way to go, according to Reuters. The German transport minister, Volker Wissing, also believes that German companies will be badly affected by this. – Cars must become cheaper through more competition, open markets and significantly better localization in the EU, not through trade wars and market isolation, writes Wissing on X. Transport Minister Volker Wissing in Germany has reacted strongly to the EU’s threats of punitive tariffs on Chinese electric cars. Photo: BENOIT TESSIER / Reuters Hungary, which has invested billions in battery factories in recent years, is also out to condemn the punitive tariff. The French finance minister, Bruno Le Maire, for his part, is positive about the punitive tariff. – It is a brave decision that shows that we can restore a balance of power between Europe and China, he said in an interview with Sud Radio on Wednesday. Can customs strike back hard? Macroeconomist Kelly Ke-Shu Chen at DNB Markets believes that many people underestimate the strong consumer power in China. – When H&M moved away from buying cotton from the Xinjiang region, they were boycotted by Chinese consumers. We can expect something similar to happen among car buyers, says macroeconomist Kelly Ke-Shu Chen in DNB Markets. It would be a crisis for many European car manufacturers. Even worse if they no longer get the same access to the Chinese market. The electric car market in China is already far larger than the European and American markets combined. Today, Chinese consumers prefer the Chinese electric cars, because they get a much better car for the same price, explains Chen. In addition, the Chinese receive money from the government to replace their fossil-fuel cars with electric cars. – European producers want to secure shares in this market, and it can be demanding as there can be a response from both consumers and the governing authorities, says Chen. What does this mean for the Chinese car manufacturers? Chen was recently in China and spoke to precisely these car manufacturers. She said that they were prepared for the fact that there would be a penalty tariff. Kelly Ke-Shu Chen is an analyst and macroeconomist, and follows the Chinese economy closely. Photo: Stig B. Fiksdal In fact, several of the accidental car companies went on the stock market after the tariff was announced, because the market and the manufacturers themselves had assumed that it would come. – Even though the customs duty was higher than they expected, there are a number of companies that will continue to make good margins by selling cars to Europe rather than to China, explains Chen. The reason is that there is a fierce price war on electric cars in China. Chen believes that the fact that the market-leading player, BYD, risks the least punitive duty illustrates an important point: – It means that the company that supposedly received the least amount of subsidies, according to the EU, is the one that has closed the most. This means in practice that it is not the subsidies that have caused them to close, says Chen. How do the Chinese authorities respond? Chinese authorities were quick to reject the debts from the EU – and say they will respond. Lin Jian, spokesperson for the Chinese authorities, believes this is “typical protectionism” and that it will damage the economic cooperation between the EU and China, according to Reuters. Chinese authorities believe the punitive tariff is a protectionist move by the EU. This is Lin Jian, who is a spokesperson in the Ministry of Foreign Affairs. Photo: Tingshu Wang / Reuters – So far they have started to look at whether French brandy can be subsidised, but otherwise not much more, explains Chen. She explains that China has reacted very differently to the EU’s manoeuvres, than to those of the US – which announced in May that they would jack up the tariff on Chinese electric cars to 100 per cent before the end of the year. – It is important for China to maintain and establish as good a relationship with Europe as possible. We also have to consider that there are no special car exports to the USA, but a good part to Europe, says Chen. Why does Norway not join the customs? The government will not follow the EU and the US and introduce tariffs on Chinese electric cars. The main reason is that Finance Minister Trygve Slagsvold Vedum (Sp) does not want to make Chinese electric cars more expensive. – For people in Norway, it is an advantage that cars do not become more expensive. And Norwegian industry has nothing to lose from the fact that we have good trade relations with China, says Vedum. Finance Minister Trygve Slagsvold Vedum (Sp) does not wish to introduce tariffs on either Chinese or other electric cars. Photo: Javad Parsa / NTB – There is also no security policy risk for people in Norway to have a Chinese car. – Will Norway eventually be pressured by our trading partners, the EU and the USA, to introduce such a tariff? – No, I don’t think so. We are not part of the EU’s customs union, and the EU is a very orderly trading partner, says Vedum. – Is the fact that there was a rather cool relationship with China just a few years ago a reason why we do not want to introduce this tariff? – No, this is a completely isolated assessment. Published 15.06.2024, at 10.10
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