Protectionist escalation: ‘Europe could be engulfed in the economic rivalry between China and the US’

New tariffs imposed by the US on Chinese electric vehicles have set the stage for heightened trade tensions, according to economist Agathe Demarais. In an interview with Le Monde, Demarais, the geo-economic adviser to the European Council for International Relations, expressed concerns about the impact of these tariffs on Europe.

The decision by President Joe Biden to impose 100% tariffs on Chinese electric vehicles represents a significant shift in the ongoing trade disputes between the US and China. Demarais highlighted that Europe could potentially face challenges as a result of this protectionist escalation.

The move to target Chinese electric vehicles, batteries, and solar panel equipment with new tariffs marks a departure from previous strategies employed by the US. While the focus had been on reducing economic reliance on China and curbing Beijing’s military advancements through sanctions and export controls on critical technologies, the latest tariffs directly impact sectors vital to the US economy, such as clean technologies.

With tariff rates ranging from 25% to 100%, Chinese companies now face significant barriers to accessing the US market. This development has raised concerns in China, a major exporter, as it signals a more stringent approach by the US in limiting market access for Chinese firms.

Demarais also noted that if European nations follow suit and impose tariffs on Chinese electric vehicles, the situation could further escalate, posing additional challenges for China. The implications of these tariffs extend to consumers, as higher tariffs are expected to lead to increased prices, particularly affecting the cost of batteries, where China supplies a substantial portion of the American market.

Overall, the imposition of these tariffs is aimed at safeguarding American industries from Chinese competition in the long run and fostering the growth of domestic green sectors. However, the immediate impact is likely to be felt through higher prices for consumers, with a more pronounced effect on the battery market due to China’s significant market share in the US.