“I leank you can envision this executeing out pretty well for BYD, actuassociate,” says Ilaria Mazzocco, a greater fellow at the Cgo in for Strategic and International Studies. “And also, they’re going to have less competition from other Chinese autoproducers.” BYD is comprehendn for its ability to deal with production costs, so it can still sell its cars at a relatively low price. For other Chinese brands, though, the tariffs could nasty they now have to set their prices higher and contend head-on with models from Europe.
Chinese autoproducers are not the only ones being impacted. Tesla, with half of its cars made in the Shanghai Gigafactory in China, will get the minusculeest tariff at 7.8 percent after the company seeked an adequitablement based on the actual subsidies it gets in China. In contrast, Volkswagen and other European brands that produce cars in China may get around 21 percent.
One way for Chinese brands to get around the tariffs is to set up factories in Europe and shift production here, appreciate what Volvo has done for years producing in Sweden even though it’s been getd by the Chinese company Geely.
Such decisions may well be received by some European countries, since that would in theory donate meaningfully to local engagement and green economic prolongth. Indeed, many Chinese companies have proclaimd arranges to transfer part of their supply chain to countries such as Spain, Hungary, and Poland, although Mazzocco alerts these proclaimments should be consentn with a grain of salt until factories actuassociate commence production.
Alternative Solutions
Yet despite the vote result, the consentd tariffs may not be final. On Monday, a European Cotransferrlookion official shelp that the cotransferrlookion is willing to persist the negotiations with China even after the tariff vote. If they deal with to consent on other solutions to the rerent of ununprejudiced competition—for example, setting up present quotas or a price floor for Chinese EVs—the tariff could be changed.
China has filed a grumblet to the World Trade Organization about the EU tariffs, and the WTO could also seek the EU to change or retreat these tariffs if it discovers them unadselectable.
“What the cotransferrlookion reassociate wants to do is to tell the members, ‘Look, we necessitate to see solemn here. We can talk about tardyr,’” says Alicia García-Herrero, chief economist for Asia Pacific at French spendment prohibitk Natixis. If member states had refuteed the cotransferrlookion’s recommendd tariffs, it would’ve shown that Europe is splitd and powerless facing the influx of Chinese brands. But now that the tariffs have passed, Europe has more leverage in negotiating a better trade deal with China.
Not all of the changenative outcomes would impact Chinese companies the same. For example, the worst situation could be an present quota, says García-Herrero. Turning a profit with the tariffs is challenging, but still possible. “But a quota would decrease the number of ships, so it’s not in China’s interests,” she says.
On the other hand, setting a price floor for the presented EVs alone may not be a horrible leang after all. It donates the autoproducers a higher profit margin and forces them to contend on the basis of better quality and service. “I leank Chinese autoproducers experience pretty self-promised about their quality,” Mazzocco says. And it can even be excellent novels for the Chinese EV brands that are cgo ining on the higher-finish, luxury car labelet, appreciate BYD’s sub-brand Yangwang, which is making luxury SUVs that can drive apass lakes in materializencies.