"Without Unity, Global Companies Face Survival Risks"
EU to Develop "Toolbox" to Block Cheap Chinese Electric Vehicles
Janet Yellen, U.S. Secretary of the Treasury, urged the European Union (EU) to jointly respond to the flood of low-priced Chinese products threatening the global economy, calling it a 'China shock.' The EU plans to raise tariffs on Chinese electric vehicles as early as July. This has raised concerns that moves to increase tariff barriers against China could spread like a domino effect.
On the 21st (local time), Secretary Yellen received an honorary doctorate at the Frankfurt School of Finance & Management in Germany and stated, "If we do not respond strategically and in a united manner, the survival prospects of companies in both countries (the U.S. and Germany) and worldwide could be at risk."
Yellen's remarks came just one week after the Biden administration significantly raised tariffs on Chinese imports such as electric vehicles, semiconductors, and solar cells on the 14th. This can be seen as a call for the EU to join in raising tariffs against China to curb China's overproduction.
She pointed out China's efforts to dominate clean energy technologies and other sectors, saying, "Such ambitions could prevent countries worldwide, including emerging nations, from building industries that can promote growth," and emphasized, "A 100% tariff increase on Chinese electric vehicles is a strategic and targeted measure."
Additionally, she noted that the supply chains of the U.S. and EU are overly concentrated in China and stressed the need to expand cooperation between the two regions on critical minerals.
Secretary Yellen is also expected to discuss this issue with member countries at the upcoming Group of Seven (G7) finance ministers' meeting held in Italy this week.
With the Biden administration's tariff hikes on China increasing the likelihood that China will push its overproduced goods into other regions, other countries including the EU are expected to raise trade barriers against China. The EU already reports that companies backed by Chinese government subsidies are exporting cheap electric vehicles into the region and is considering raising tariffs on Chinese electric vehicles. Thirty-seven percent of electric vehicles exported to Europe, the world's second-largest electric vehicle market, are produced in China. The EU is reported to plan raising tariffs on Chinese electric vehicles as early as July. The Rhodium Group, a China-focused think tank, estimated that the EU would need to raise tariffs on Chinese electric vehicles up to 50% to offset the effect of Chinese government subsidies.
Meanwhile, Ursula von der Leyen, President of the European Commission, also announced that the EU is developing a 'toolbox' to block the influx of cheap Chinese electric vehicles.
In an interview with foreign media on the same day, she said, "China is artificially overproducing cheap products in large quantities, flooding our market," and "Our companies are struggling to access the Chinese market under fair conditions."
However, she suggested that the response would be more targeted than that of the U.S. Von der Leyen explained, "It will be a more differentiated and targeted approach," adding, "We want to send a signal that this is not about closing markets or protectionism." She emphasized, "We want de-risking with China, not decoupling."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
