Supply Chain & Global Disruption: Why the EU Considers to Impose tariffs on Chinese EVs
By Federico Fo.
In September 2023 the EU announced its plans to impose a series of tariffs on Chinese Electric Vehicles (EVs) batteries, because of suspected use of unfair practices in production which bring other competitors to a disadvantage. The EU then began investigations over the presence of said practices, the result of which will determine whether the EU will be able to apply the tariffs.
These suspected unfair practices consist in the provision of advantageous subsidies by the Chinese government to EVs producers which would then make their products much cheaper and more competitive than European goods. Because of this the EU is considering imposing tariffs on the batteries of the Chinese EVs, indispensable for their production. Unfortunately, different European businesses risk being damaged by these tariffs too, as different EVs producers within the EU found the cheap prices of EVs batteries from China very convenient in order to produce their own EVs. Because of this, in the last meetings of the European Council, countries strongly influenced by car producers like Germany have opposed the application of tariffs as a plan.
Manufacturing of EV (Tesla autobots); Author: Steve Juvertson (Flickr); Created on 5 October 2011; uploaded on 23 February 2013; https://en.wikipedia.org/wiki/Manufacturing#/media/File:Tesla_auto_bots.jpg
Still, it can be argued that tariffs would be necessary in order to help European EVs producers to become more competitive and productive, as Chinese EVs already own big shares of the European market, making the Global Supply Chain of the EU highly dependent on Chinese producers. Moreover, this possible consequence creates different risks from the point of view of national security as well. Indeed, think tanks from both the UK and the US found out that the use of Chinese EVs can be a risk for cybersecurity as these can be easily accessed and operated remotely, allowing the user to look over data in the nearest charging point. In light of this, the risk that Beijing could decide to weaponize its supply chain becomes ever more tangible.
The latter point becomes even more plausible when considering the increasing tensions between Western powers and China in areas such as the South China Sea and Taiwan. It follows that there is an increasing possibility of a sudden disruption of the supply chain over which European consumers and producers continue to rely, since China is an extremely important actor in the field of exports. As the use of Electric Vehicles becomes more and more prominent in European Societies, the sudden stop in supply because of possible conflicts with China may further destabilize European societies. Therefore, the same situation which has already been observed in the past when European economies were strongly damaged by the stop in provision of Russian natural gas and oil could return in a different context.
All this being said, different analysts argue that it is necessary for Western countries and especially for the EU to change their current supply chain with unfriendly countries in order to avoid destabilization of their economies. These analysts propose the need to apply strategies of “friend-shoring”. This foresees that Western countries change their supply chain, moving their chain of production to more trusted and friendly countries, thus diminishing the risk of possible disruptions in case of conflicts. Consequently, the imposition of tariffs by the EU would in this case be the right choice, considering how influential China is becoming within the European market. This continued influence would provide China with high negotiating power which may actually be detrimental in future as it could more easily impose its will over the European Continen
