Canada has joined the US and EU in imposing punitive tariffs on Chinese electric vehicles (EVs), in a clear move towards protectionism. The 100% tariff on Chinese EVs and the 25% tariff on Chinese steel and aluminum reflect a clear attempt to challenge China’s growing influence in the global auto market. This is not only to protect domestic manufacturers, but also to strategically work with Western allies the US and EU to challenge China’s low-cost exports. The move reflects growing anxiety in the West about China’s technological advancements and competitive advantage. China’s EV sector has quickly emerged as a leader in innovation, producing affordable and efficient vehicles that have gained significant popularity around the world. The US doubled its tariffs on Chinese EVs to 100% earlier this year, citing the need to protect American jobs from unfair competition. The EU quickly followed suit, raising tariffs on some Chinese EV models to as much as 38%. Canada’s move solidifies a coordinated effort to prevent China from flooding the market with cheaper alternatives that threaten domestic industries. These measures represent a broader economic competition, where national industries become battlegrounds for tariffs, protectionism and geopolitical maneuvering.
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. The unprecedented move, announced on September 3, demonstrates China’s intent to confront what it sees as unilateral and discriminatory trade measures. The investigation aims to challenge Canada’s tariffs, which Beijing claims were imposed despite widespread opposition. The broader implications of the investigation cannot be ignored. China claims Canada’s actions violate international principles and plans to take the dispute to the World Trade Organization (WTO). At the same time, China has launched an anti-dumping investigation into Canadian rapeseed and chemical products, deepening the trade deadlock. Beijing’s actions reflect a deeper frustration with what it perceives as growing protectionism in the West. By launching this investigation, China is sending a clear message that it will not tolerate attempts to undermine its economic position. As trade tensions escalate, the outcome of this investigation and its subsequent WTO appeal could reshape the dynamics of China’s trade relations with Canada and its broader Western allies.
The narrative of some European societies, echoing Washington’s rhetoric, portrays China as a looming “strategic threat” to the continent, and makes relations with Russia a convenient focus of concern. But this fearful stance poses obvious contradictions. Countries like India, which maintain strong trade relations with Moscow, are not subject to similar criticism, while the economic windfall from the Ukraine crisis has largely gone to the United States, and the EU has borne the brunt of rising costs. China’s recent anti-dumping investigations targeting EU dairy, brandy and pork are clearly retaliatory. They are a response to the EU’s expanded moves, including its threat of punitive tariffs on Chinese electric cars, an industry that China has helped to foster as a global force. To be frank, China’s strategy so far has been one of restraint, responding only when provoked. Ultimately, Europe must decide whether to follow Washington’s lead or to take a more pragmatic path, recognising that China’s rise is not a threat but an opportunity for constructive engagement.
The rising trade tensions between China and the West are seen as a defensive maneuver by traditional automakers in Europe and the United States, who increasingly see the rise of China’s electric vehicle (EV) market as a serious threat. The trade imbalance between the EU and China in 2023 underscores these concerns. The EU exported just 11,499 EVs to China, worth €852 million, while China exported 438,000 EVs to the EU, worth €9.7 billion. This imbalance underscores the growing dominance of Chinese automakers, who boast advanced technology and superior production capabilities in EVs. As tensions rise, the potential fallout could reshape not only the automotive industries in both regions, but also global markets. As the world’s largest producers and consumers of EVs, stable trade relations between China and the EU are crucial. Historically, their cooperation has led to significant growth, with both sides benefiting from each other’s markets and manufacturing capabilities. Maintaining these synergies is essential to avoid long-term disruption in a rapidly evolving industry.
On the positive side, despite the constant rhetoric of China skeptics, most EU member states have not fully embraced the anti-China stance that is being touted in certain areas. Major countries such as Germany, France, Italy, Spain and the Netherlands have maintained stable and productive relations with China and understand the value of open communication with the world’s second-largest economy. In this context, the EU’s outgoing chief diplomat, Josep Borrell, recently urged the bloc to adopt a more restrained and rational view of China. His warning came amid concerns that blindly following the US lead could lead the EU into an unnecessary trade war. For Europe, the challenge is to balance strategic interests while maintaining a fruitful relationship with China. China is a very important partner that cannot be overlooked in rhetoric. The pragmatic stance of Europe’s major powers suggests that cooperation with China remains a pragmatic and necessary approach for the continent’s future.
After all, China is one of Europe’s largest trading partners, and economic ties between the two countries have historically fostered mutual growth and stability in the automotive sector. China’s position is clear: economic disputes should be resolved through dialogue, not through unilateral protectionist measures. Imposing tariffs on Chinese electric vehicles could lead to more retaliatory measures, further escalating tensions and damaging both economies. As trade tensions escalate, it is important for EU leaders to consider the broader implications. If they escalate further, they risk damaging not only the automotive sector but also the global economy. Dialogue and negotiation, rather than tariffs, may offer the most constructive path forward. This would preserve the longstanding and fruitful relationship between China and the EU, while also maintaining market stability on a global scale. As Josep Borrell prepares to retire in October and Estonia’s Prime Minister Kaja Kallas is expected to succeed him, his recent comments will continue to resonate in the corridors of EU policymaking. Borrell’s warnings – particularly about the dangers of blindly following the United States on foreign policy issues related to China – deserve serious consideration. A win-win approach to trade and diplomacy is more likely to benefit both sides than an escalation of conflict triggered by protectionist measures.
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