China‘s top trade official, Wang Wentao, is on a mission to sway EU trade boss Valdis Dombrovskis and prevent hefty duties on Chinese electric vehicle (EV) imports. However, his whistle-stop tour of European capitals might hit a roadblock in Brussels, as tensions escalate over nearly a year of tit-for-tat trade retaliation. The stakes are high, with the EU threatening duties of up to 35.3 percent on Chinese EVs, backed by substantial state subsidies, reports Politico.

Wang’s European Tour: Mixed Reactions

Wang’s journey started in Rome and Berlin, where he met with industry representatives and government officials. In Berlin, Germany‘s Economy and Climate Action Minister Robert Habeck struck a balanced tone, urging both the EU and China to find a negotiated solution.

Habeck emphasized the importance of fair competition, stating, “The European Commission and China should make every effort to find a negotiated solution… [We] embrace competition — but it must be on fair terms.”

However, Wang’s efforts to rally support against the duties have met with varied responses. In Italy, Foreign Minister Antonio Tajani affirmed his government’s support for the EU’s position, despite being open to negotiations.

Meanwhile, Spanish Prime Minister Pedro Sánchez’s call to “reconsider” the duties during his visit to China last week did not significantly shift the EU’s stance.

The Trade War That Isn’t (Yet)

Despite the tense atmosphere, economist Gregor Sebastian of the Rhodium Group argues that the current standoff is not yet a full-blown trade war. “It’s definitely tit-for-tat, but no one’s pulled the trigger yet. The major trade flows will not be affected and the import of Chinese EVs will slow down but continue as well,” Sebastian noted.

The EU’s strategy of imposing varying duties on different Chinese EV producers has also prevented a united front among Chinese carmakers. With duties ranging from 17 to 35.3 percent, excluding non-Chinese producer Tesla, the impact on each manufacturer varies significantly.

A Tough Gig in Brussels

Wang’s final stop in Brussels is expected to be challenging. The EU’s refusal to engage with China’s argument that its support for EV-makers harms European industry leaves little room for a breakthrough. Wang’s dual strategy of seeking a negotiated solution while trying to rally EU countries against the duties may ultimately undermine his efforts.

“If [China] keeps pushing for a negotiated solution, fewer countries will be inclined to vote against” the duties, a senior Brussels-based trade lawyer argued.

EVXL’s Take

The ongoing trade tussle between China and the EU highlights the growing importance of the electric vehicle market. As more countries adopt EVs, trade disputes like this one are likely to become more common. However, it’s crucial to remember that fostering a competitive and fair market is essential for the growth of the EV industry.

What are your thoughts on this trade dispute and its potential impact on the EV market? Leave your comments below.