IN an alarming and protectionist trend, Canada has joined forces with the United States and the European Union to impose punitive tariffs on Chinese electric vehicles (EVs). A 100% tariff on China-made EVs, coupled with a 25% duty on Chinese steel and aluminum, reflects a clear attempt to challenge China’s growing influence in the global automotive market. It’s not just about protecting domestic manufacturers; it’s a strategic alignment with Western allies, namely the U.S. and the European Union, in challenging China’s low-cost exports. This move exemplifies a growing Western anxiety over China’s technological advancements and competitive edge. China’s EV sector has rapidly become a leader in innovation, producing affordable, efficient vehicles that have gained significant global traction.
The United States led the charge earlier this year, doubling its tariff on Chinese EVs to 100%, citing the need to protect American jobs from unfair competition. The European Union quickly followed, hiking tariffs on some Chinese EV models by as much as 38%. Canada’s move solidifies a coordinated effort to prevent China from flooding the market with cheap alternatives that threaten domestic industries. These measures represent a broader economic rivalry, one where national industries become battlegrounds in a war of tariffs, protectionism and geopolitical manoeuvring.
These escalating tariffs are not merely economic barriers – they represent an attempt by Western powers to contain China’s rise in the global marketplace. This has resulted in a new trade war, as China has also adopted retaliatory measures. In a strategic response to Canada’s tariff hikes on Chinese electric vehicles (EVs), steel, and aluminum, China has launched its first-ever anti-discrimination investigation. This unprecedented move, announced on September 3, signals China’s intent to push back against what it views as unilateral and discriminatory trade measures. The investigation aims to challenge Canada’s tariffs, which Beijing argues were imposed despite broad opposition. The broader implications of this investigation cannot be ignored. China is planning to take the dispute to the World Trade Organization (WTO), asserting that Canada’s actions violate international principles. Simultaneously, China is launching anti-dumping investigations into Canadian rapeseed and chemical products, further intensifying the trade standoff. Beijing’s actions reflect a deeper frustration with what it perceives as growing Western protectionism. By initiating this investigation, China is sending a clear message that it will not tolerate attempts to undermine its economic standing.
The narrative in some European circles, echoing Washington’s rhetoric, paints China as a looming “strategic threat” to the continent, its relationship with Russia a convenient focal point for concern. Yet, this alarmist stance raises glaring contradictions. Countries like India maintain robust trade relations with Moscow without facing similar condemnation, and the economic windfall of the Ukraine crisis has largely been reaped by the United States, leaving the European Union to bear the brunt of rising costs. China’s recent anti-dumping investigations – targeting EU dairy, brandy, and pork – are clearly retaliatory. These are in response to the EU’s escalating moves, including threats of punitive tariffs on Chinese electric vehicles, an industry China has nurtured into global prominence. Factually speaking, so far China’s strategy has been one of restraint, responding only when provoked. In the end, Europe must decide whether it follows Washington’s lead or carves a more pragmatic path, acknowledging that China’s rise need not be a threat but an opportunity for constructive engagement.
The escalating trade tensions between China and the West are seen as defensive manoeuvres by traditional automakers in Europe and the United States, who increasingly view China’s rise in the electric vehicle (EV) market as a profound threat. The trade disparity between the EU and China in 2023 underscores this concern. While the EU exported only 11,499 EVs to China, worth 852 million euros, China shipped an impressive 438,000 EVs to the EU, valued at 9.7 billion euros. This imbalance reveals the growing dominance of Chinese automakers, whose EVs boast advanced technology and superior production capacity. As tensions heighten, the potential fallout could reshape not only the automotive industries of both regions but also the global market. With China and the EU standing as the world’s largest producers and consumers of EVs, a stable trade relationship is critical. Historically, their cooperation has driven substantial growth, with both sides benefiting from each other’s markets and manufacturing prowess.
Positive thing is that, despite the persistent narrative pushed by China skeptics, the majority of EU members have not fully embraced the anti-China stance being touted in certain quarters. Key nations like Germany, France, Italy, Spain, and the Netherlands have maintained stable and productive relations with China, understanding the value of open communication with the world’s second-largest economy. It is in this context that Josep Borrell, the EU’s out-going top diplomat, recently urged the bloc to adopt a more measured and rational view of China. His caution comes amid fears that blindly following the U.S. lead could plunge the EU into an unnecessary trade war. For Europe, the challenge lies in balancing strategic interests while preserving beneficial ties with China – a partner too important to be sidelined by rhetoric.
The pragmatic positions of Europe’s major powers suggest that cooperation with China remains both a pragmatic and necessary approach for the continent’s future. China, after all, is one of Europe’s largest trading partners, and the economic ties between the two have historically fostered mutual growth and stability in the automotive sector. China’s stance is clear: economic disputes should be resolved through dialogue, not unilateral protectionist measures. Imposing tariffs on Chinese electric vehicles could trigger more retaliatory actions, further escalating tensions and damaging both economies. As trade tensions rise, it is crucial for EU leaders to consider the broader implications. Further escalation risks undermining not only the automotive sector but the global economy.
—The writer is political analyst, based in Karachi.
