The growing trade tension sees Brussels maneuvering cautiously between the tariff increases imposed by Washington and possible retaliations from Beijing

by Marco Arezio

The tension between the United States, the European Union, and China, now considered a strategic rival, continues to grow, although it cannot yet be called a trade war. The last G7 held in Stresa highlighted the differences between Washington and Brussels regarding Beijing.

The EU, internally divided, maintains a more cautious approach compared to the USA, fearing Chinese retaliation. In fact, in June, the European Commission will announce new tariffs on electric cars produced in China, which will rise from 10% to 25%, still lower than the 100% tariffs imposed by the Biden administration.

Brussels' decision is the result of an investigation into the import of electric vehicles from China, concluding on June 9. The investigation aims to verify whether Beijing is heavily subsidizing its industry, flooding the European market with low-cost electric vehicles.

This initiative was promoted by France, despite Germany's reservations: Paris pushes for a protectionist policy, while Berlin fears for its exports to China.

Italy, as evidenced in Stresa, is closer to the French positions. Economy Minister Giorgetti stated that "the issue of tariffs towards China is an objective fact, not a political choice" and that "the US Inflation Reduction Act forced the EU to reflect on how to behave; otherwise, we will pay twice a competition deficit with the USA and China."

On May 14, the White House announced a significant increase in tariffs on certain Chinese products worth 18 billion dollars, including electric vehicles, solar panels, and semiconductors (doubling to 50%), electric batteries, and critical minerals needed to produce them (to 25%), as well as some steel and aluminum imports.

The declared objective of the USA is to protect American strategic industries from competition supported by Chinese subsidies. US Commerce Secretary Gina Raimondo said, "We know the strategies of the People's Republic of China, we cannot allow China to undermine US supply chains by flooding the market with artificially cheap products."

This move has worried the European Union, fearing an influx of Chinese electric cars into the European market. Electric vehicles are only part of the problem: Brussels is conducting several investigations into unfair trade practices by China that could lead to new tariffs, including medical devices, security control machines, wind turbines, wood flooring, and tin-plated steel laminates.

German Chancellor Olaf Scholz, during a visit to Sweden, highlighted that 50% of electric vehicle exports from China come from Western brands with factories in the country.

According to the group Transport & Environment, Chinese-made electric vehicles will account for 25% of all battery car sales in the EU this year, compared to 19.5% last year.

Brussels finds it difficult to react with the same intensity as the USA for two reasons: European manufacturers are more dependent on the Chinese market than American ones, and the EU is less inclined to ban direct foreign investments from China, as demonstrated by Hungary's decision to welcome BYD.

American tariffs are not limited to the automotive sector. Biden will maintain tariff increases on Chinese goods worth over 300 billion dollars, introduced by his predecessor Trump, which Biden himself criticized as "taxes on American consumers." China accuses Washington of wanting to prevent global competition and warns that this decision will negatively affect bilateral cooperation.

Beijing has invested for years to become self-sufficient in the sectors that Biden is trying to develop in the USA. It produces a third of the world's manufactured products, more than the USA, Germany, Japan, South Korea, and the UK combined, as noted by the New York Times.

Biden's move must also be read in an electoral key: the president must counter Trump in the Rust Belt states, where the American automotive industry will receive subsidies to facilitate the transition to clean energy.

Trump promises to impose tariffs on Chinese electric cars, even those coming from third countries like Mexico. According to sources from Trump's campaign, the former president and his advisers plan to impose higher tariffs on cars entering from Mexico if this country does not stop sending Chinese-made electric cars.

Trump has stated that he will tax every car from Chinese plants in Mexico at 200% and increase tariffs on all foreign products by 10%, with a 60% increase on Chinese ones.

Biden argues that Trump's approach did not work and that his administration is trying to increase American production and jobs in emerging sectors. However, Biden continues to follow some measures introduced by Trump, such as trade restrictions and subsidies to American industries.

The difference is that Biden aims to create international alliances, including with Europe, to counter China, although he has angered allies by imposing tariffs on steel and aluminum from the EU and Japan.