As trade war brews, EU scrambles to gauge what Chinese retaliation lies ahead

Officials ponder what countermeasures await European resistance against ‘market-distorting’ Chinese subsidies on electric vehicles

‘They always go for the emotional stuff,’ one former official said, noting previous targets have included wines

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European Union officials fear a repeat of the tit-for-tat tariffs sparked more than a decade ago over efforts to curb cheap solar panels from China. Photo: AP

Published: 11:34am, 22 May 2024Updated: 4:21pm, 22 May 2024

In June 2013, French vineyard owners were left fuming after China slapped hefty import tariffs on European wines.

The European Commission had raised duties on Chinese solar panels two days earlier, saying they were so cheap that they were decimating the continent’s burgeoning photovoltaic industry.

Behind closed doors, as the EU was agonising over whether to put tariffs on Chinese solar imports, German officials were told its car industry – enjoying huge profits from China’s unprecedented economic boom – was also in line for reprisals.

Headlines at the time screamed of an imminent trade war. Fast-forward 11 years, European officials are experiencing déjà vu.

New fears of a trade war have been bubbling over in recent months. EU moves to counter what it calls “market-distorting” Chinese subsidies have drawn repeated vows from Beijing to strike back.

A blockbuster investigation into subsidies in China’s electric vehicle industry will conclude in early June. It is expected to result in duties on imports of Chinese-made EVs.

The investigation has struck a nerve in Beijing, whose initial response was familiar.