China’s EV sector could offset looming EU tariffs with detours via ‘friendly’ tracks, but be prepared for countermeasures
- European Union is set to conclude its investigation into subsidies in China’s electric vehicle sector in June
- Analysts say China is likely working out plans, but that it should be wary of making moves with the ‘sole intention’ of bypassing the potential tariffs
Firms could mitigate the potential impact of the European Union finalising its investigation into China’s electric vehicle (EV) sector by building production facilities in the likes of Turkey, Serbia and Hungary, but analysts also warned Beijing to look out for stricter countermeasures from the bloc.
“Chinese EV makers are likely already working out plans to mitigate potential EU high import tariffs, replicating the Japanese model used in the US in the 1970s and 1980s,” said Sebastian Contin Trillo-Figueroa, a Hong Kong-based geopolitical analyst who specialises in EU-Asia relations.
Trillo-Figueroa noted that Honda, Nissan and Toyota established manufacturing facilities in the United States in the 1970s and 1980s, employing local workers and integrating into the supply chain.
But should similar moves by Chinese EV makers have the “sole intention” of bypassing EU import tariffs, the bloc “might interpret tariff circumvention via Turkey as an attempt to undermine its trade regulations”.
“[And it] could enforce more stringent rules of origin for vehicles [that] could complicate and increase the cost of compliance,” Trillo-Figueroa added.
