What could 25%-100% US tariffs on Chinese goods mean to the UK and the EU?

The new round of tariff hikes by the US on China caused concern in Europe.

The US announced in mid-May new tariffs ranging from 25% to 100% on 14 categories of goods from China worth US$ 18 billion, under Section 301 of the Trade Act of 1974. Targeted goods include face masks, syringes and needles, semiconductors, batteries, solar cells and EV cars, among others.

The move by the Biden administration fuels the EU’s anxiety and a fierce and urgent debate over the influx of Chinese-made EVs. Should the EU follow suit or look for alternative solutions? Solutions to what? The debate is still going on.

In a recent episode of the Beijing to Britain podcast, Sam Hogg and Steve Lynch put these questions to Rory Green, Head Economist, China and North Asia at TS Lombard.

Key points Green made:

  • Non-tariff policy approach, e.g. leveraging local advantages here to get Chinese EV manufacturers to come and make cars here in Europe and the UK, and what else needs to happen before this approach can succeed;
  • Possible retaliation from China if the EU picks up the tariff tool  or goes on the non-tariff route;
  • EV is just the tip of the iceberg – China is shifting from one of the biggest trade partners to one of the biggest technology partners in more emerging economies, and becoming a major tech provider in the world. This trend is not well understood in the EU and UK;
  • China becoming highly competitive in all aspects of advanced manufacturing is a fact and is reshaping not only global trade but also the global tech power
  • RMB is slowly gaining momentum on the world stage, used more in trade partner countries and as an alternative to the US$.

While the front page photos showing Chinese EVs turning European ports into huge parking lots demonstrate the power of visual impact, one major Chinese automaker Great Wall just announced it is closing European headquarters in Munich due to tariff uncertainties. In the meantime, social media posts by some carmakers allude to different pictures. Two examples here:

▶️ BYD EUROPE, showing “a new step forward in UK public transportation”: The All-New double-deck bus with Blade Battery Chassis, the BYD BD11 has been launched in London.

▶️ Xiaopeng He, Chairman & CEO, XPENG, announced his company’s ambition for the future and the near-term growth strategy. He talks about “a super brand akin to VW”, Smart EV, new launches, and a salute to VW for the “deepened collaboration” in less than a year.

On a separate note, while EV sales and tariff news dominate media front pages worldwide,  AD (autonomous driving) seems forgotten. But it is not “out”. On the contrary, an analysis of WeRide on Sinotalks puts AD technology in the spotlight – a field BYD aims to conquer but faces tough competition.

“Key ingredients” in the WeRide recipe for success, beneath the “impressive” license numbers, leading technology, and some names to conjure with, like, you know, Nvidia Corporation (United States), Robert Bosch GmbH  (Germany), SMRT Corporation Ltd. (Singapore), The Renault-Nissan-Mitsubishi Alliance (European Union), is some tried and true business wisdom.

“First, WeRide’s ability to leverage support from its strategic and financial investors to form strong relationships with local and national governments inside and outside China.  […] Second, WeRide’s excellent collaborations with select investors and other partners allow (it) to take the company’s innovative products to an unrivalled level; these products, in turn, help attract more support from governments, investors, and prospective collaborators.”

Isn’t it also true in other sectors, in principle at least? We think so.

On this note, we dug out an earlier blog by Ting Zhang, Founder & CEO at Crayfish.io, on her visit to BYD’s site in Shenzhen earlier this year.

Further reading: