The EU and the US respond to growing Chinese imports of​​​​​​​​​​​​​​ electronic vehicles​​​​​​​​​​​​

The market for electric vehicles (EVs)continues to grow​​​​​​​ globally with annual growth of 35% in 2023 with 14.2 million units sold worldwide. There is also growing tension between countries as the international trade in EVs becomes increasingly protectionist. Many countries see the threat posed by cheap Chinese EVs as a particular problem for their own car makers. 

China dominates the world EV market with 66% of global manufacturing capacity. Many in the automotive industry believe Chinese EV producers benefit from government subsidies. The US-based Centre for Strategic and International Studies claim the Chinese government have paid $100 billion in subsidies to the EV industry in the country since 2009, although Chinese government officials dispute the figures. 

What is seen as a ‘flood’ of EVs from China is being met by trade barriers from the EU and the US. The EU has announced a 38% tariff on EVs imported from China on top of an existing tariff of 10%. The Chinese government has responded aggressively to the EU’s tariffs with a threat to lodge legal action with the World Trade Organisation. The use of tariffs by different countries in the EV markets risks a trade war between the EU and China and the US and China. If this happens protectionism could run over into other sectors such as consumer electronics and agricultural markets

In many ways, a surge in the global supply of EVs is a good thing for consumers as prices fall and if more people replace their petrol and diesel cars with EVs it has to be good for the environment and for reduced carbon emissions. However, as is often the case with protectionism there are political factors that come into play. Lobbyists from the EU and US automotive sectors will put pressure on politicians to protect the profits of car manufacturers along with the jobs of workers threatened by cheap Chinese EVs. 

Possible questions to discuss with a class

1. Why are the Chinese subsidising EVs?

2. What type of trade barriers can the EU and US use to protect their EV markets?

3. Why are the EU using tariffs to protect their EV car makers?

4. Discuss the consequences of the EU and US using trade barriers to protect their EV markets.