After the United States announced imposing high tariffs on Chinese products such as electric vehicles, the European Union is expected to follow suit. Some businesses are concerned that the Chinese Communist Party (CCP) may retaliate harshly, but Kurt Campbell, the second-ranking official at the U.S. State Department and Deputy Secretary of State, stated on Wednesday (May 29) that China’s weakened economy might prevent it from implementing severe retaliation as before.
He emphasized that if countries collectively impose tariffs on Chinese automobiles, it would make it more difficult for the CCP to retaliate against each country individually.
The issue of China’s overcapacity is a topic of common concern for the United States and Europe. The CCP is flooding the global market with a large number of cheap electric vehicles and other products, undermining the interests of domestic businesses in various countries. Earlier this month, the Biden administration increased tariffs on Chinese electric vehicles from 25% to 100%.
Italy’s Minister of Economy and Finance, Giancarlo Giorgetti, stated that it might only be a matter of time before the EU follows the U.S. in imposing tariffs.
He told Italian national television broadcaster RAI, “The United States has made a very difficult decision, and Europe may have to consider doing the same. Because U.S. tariffs may lead to an increase in Chinese exports to Europe.”
According to Reuters, the EU is expected to announce temporary tariffs on Chinese electric vehicles on June 5, which would bring billions of dollars in new costs to Chinese companies.
Based on trade data from 2023, for every additional 10% increase in tariffs on top of the existing 10%, it would cost Chinese electric vehicle exporters around $1 billion. With Chinese electric vehicle manufacturers expanding their exports to Europe, this cost is expected to rise this year.
Previous investigations by the EU into subsidies on products from other countries led to additional tariffs ranging from about 9% to 26% on investigated companies. Analysts believe that tariffs on Chinese electric vehicles will fall within this range. These tariffs are expected to be implemented starting early July.
The CCP has signaled its readiness to negotiate with the EU.
While European companies are concerned that the CCP may take severe retaliatory measures, causing them to lose access to the Chinese market, Kurt Campbell of the U.S. State Department stated that the uncertainty in China’s economy is likely to prevent Beijing from retaliating against Europe as harshly as in the past.
According to the U.S. media outlet Politico, Campbell mentioned to some media on Wednesday in Brussels, where NATO is located, that “in the current environment, I think China (the CCP) recognizes some weaknesses in its own economy, hence they are being cautious about taking comprehensive retaliatory measures, as we have seen in recent actions against Australia, South Korea, the Philippines, and other countries.”
“While I don’t think this brings us much comfort, I believe from the perspective of the Chinese (CCP) government, they now realize that the economic and business environment is more complex,” he said. “In many ways, if countries coordinate their actions, then it becomes more difficult for (the CCP) to retaliate against one country or another.”