The EU is increasingly caught in the middle between the US and China’s trade wars, and needs to pick a side
Leon de Graaf is a Sustainability Advocate at #SustainablePublicAffairs.
While the European Commission had a “constructive” talk with the Chinese on the EU’s low import tariffs on Chinese electric vehicles, the US is coming out all guns blazing.
Not only are the US import tariffs on Chinese EVs three times those of Europe’s (100% vs 35.4%), the US Commerce Department doubled-down on Monday by proposing to prohibit Chinese software (as of 2027) and hardware (as of 2029/2030) in connected and autonomous vehicles on US roads, citing national security concerns.
Basically all Chinese electric cars would be affected.
The fact that the US news comes only days after the European Commission’s talks with China indicates that the US government coordinates little to nothing with European leaders.
One can think about several reasons for that, one being that those European leaders are often too hesitant to anger China. They would therefore never allow the European Commission to agree on such far-reaching measures.
Case in point: While the EC’s import tariffs on Chinese EVs are so low that they will likely do little to deter the import of Chinese EVs, even these relatively low import tariffs get criticised by EU member states that are either being infiltrated by Chinese green Trojan horses (such as Spain and Hungary), or who’s EU businesses have high financial stakes in China (e.g. Sweden’s Volvo or Germany’s Volkswagen and BMW).
But what EU leaders should really be asking themselves: Is the US overreacting, or is the EU underreacting?
True, the US measures will have far-reaching consequences. As Mr Björn Fägersten from the Swedish Institute of International Affairs states, it might be next to impossible to strip Western EVs from Chinese software and hardware in the short term.
But at the same time, the US government seems to understand the risks: We’re talking about electric vehicles that can be operated and controlled remotely with apps. Millions of them may one day be fully autonomously driving us around, us putting our full trust in them doing so safely.
Oh, and we might also use them for a range of other things, such as being mobile batteries to power our home soon. Sounds like critical infrastructure to me, which has been a reason in the past for EU governments to block Chinese components, such as on 5G.
These measures are of course part of a wider struggle between the US and China where one is the world’s most powerful nation and the other is trying to take the throne. The US is trying to slow down the Chinese technological advance, not just on EV excellence but on many fronts that will define future economic and technical dominance, such as semiconductors.
The EU, like always, is caught in the middle, and is increasingly being pushed to pick a side.
And it might be smart to pick the US’ side and become tougher on China, such as imposing higher import tariffs, local content requirements, or out-right bans from EU auctions for companies who’s source countries are causing global overcapacity.
That’s because China is not competing fair-and-square: Studies like those by TNO and the Hague Center for Strategic Studies show excessive subsidies and closed markets are damaging Europe’s competitiveness for many cleantech sectors, such as wind turbines and electrolysers, but other well-known examples include steel, solar panels and of course EVs.
Following the US would therefore be entirely reciprocal, a word we love using in Europe but so far never really managed to translate into firm policies.
Let’s see if the upcoming hearings of the Commissioner-designates will shed any light!
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