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Can EU tariffs on Chinese vehicles trigger a trade war? – Danske Bank

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Last week, the result of the EU Commission’s anti-subsidy investigation on Chinese Electric Vehicles (EVs) was finally released. EU tariffs on Chinese vehicles will increase from 10% to 27- 48% depending on the car brand, Danske Bank Chief Analyst Allan Von Mehren notes.

Trade war is an unlikely scenario

“EU tariffs on Chinese vehicles will increase from 10% to 27- 48% depending on the car brand. The tariff lift will create a higher barrier for Chinese EVs but they are likely to still be able to compete.”

“China denounced the move as “a blatant act of protectionism” and this week hit back with an anti-dumping investigation into imports of EU pork, which is says is supported by subsidies with EU exporting its’ overcapacity to China. It thus returns EUs accusations that China is exporting its’ overcapacity to Europe.”

“While the EU-China trade tensions are clearly on the rise, it is still in quite narrow sectors and in our view not big enough to be a trade war. We also doubt it will evolve into a wider trade war as neither EU nor China have any interest in this given economic vulnerabilities in both areas. Also, the EU is divided over the issue with especially German car companies speaking up against the tariffs.”

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