By Wang Kai

 

BEIJING, July 2 (China Economic Net) - “In the long term, the EU tariff against Chinese EVs can’t truly ‘protect’ its auto industry. What is perhaps going to happen is reduced competitiveness and fewer jobs in the automotive sector in Europe”, Johan Annell, Partner and General Manager Beijing of ARC Group, an international advisory firm, told China Economic Net (CEN) in an interview. 

 

As the provisional tariffs, ranging from 17.4% to 37.6% for different EV exporters, is expected to take effect in about two days, trade tensions between the two sides escalate. Last week, China’s Ministry of Commerce of launched a final review of the anti-dumping measures applied to imports of toluidine originating in the EU. Earlier, the ministry had announced an anti-dumping investigation of pork and its by-products from the EU. 

 

“The EU tariff is within people’s anticipation for quite some time since the probe started last year. It's not a surprise. However, such protective measures are in nobody's interest. Its long term consequences can be worrying as automotive supply chains will be even more fragmented”, Johan Annell said.

 

Chinese and European auto players are becoming increasing inter-dependent. According to statistics from the European Federation for Transport and Environment, among the 300,000 units of made-in-China all-electric cars sold across the EU last year, more than half are Western brands with operations in China, such as Tesla and BMW.

 

“Especially in the battery value chain, most of the biggest upstream players are Chinese and they have been setting up factories in Europe for years. It's an important integration for the auto ecosystem”, Johan Annell said.

 

“While regionalized supply chains are natural in the auto sector because of the complexity of automotive manufacturing and companies’ preference to have their suppliers close by, yet with the coming tariffs adding to uncertainty, the advantages of being a global player are being hurt”, he added.

 

He told CEN reporter that the tariffs would further propel Chinese companies to shift attention to South America, the Middle East, and other markets.

 

“Still, they would sell in substantial volumes in Europe, only with lower margins”, he added, adding that more Chinese auto companies will turn to localized production in global markets including the EU.

 

“We will see more acquisitions or contract manufacturing deals happening in Europe by Chinese players. Without it, the European region will see higher costs of EVs and slowing down adoption, something that has already started to happen”, he said.