China's BYD opens its first electric vehicle (EV) factory in Southeast Asia, in Rayong.

European Union governments exposed divided views on the merits of EU tariffs on imports of China-built electric vehicles in a non-binding but still influential vote, sources with knowledge of the vote said on Tuesday.

The European Commission, which oversees the bloc's trade policy, has set provisional duties of up to 37.6% on EVs imported from China to counter what it says are unfair subsidies and has canvassed EU member views in a so-called advisory vote.

A dozen EU members voted in support of the tariffs, four voted against and 11 abstained, the sources said.

The Commission is expected to take this into account when deciding whether to follow up with definitive duties in what is the EU's highest profile trade case yet.

If it does advocate duties at the end of its investigation, they will come up for a binding vote among the EU members and would be imposed unless a qualified majority of 15 member countries representing 65% of the EU population vote against.

If the voting pattern of the advisory vote were repeated, definitive duties, typically applicable for five years, would then enter force.

However, the large number of abstentions reflects wavering among many EU members, aware of the Commission's arguments that trade must be on a level playing field, but also mindful of the risk of a trade war with China. Beijing has threatened wide-ranging retaliation.

German carmakers, which made a third of their sales last year in China, have urged the EU to drop tariffs, which would not only apply to Chinese producers such as BYD, Geely and SAIC, but also to China-built cars of Western automakers such as Tesla and BMW.

In the vote, France, Italy and Spain supported the tariffs, while Germany, Finland and Sweden abstained, government sources said.

A German source said that its abstention was in the spirit of "critical solidarity" with the Commission. Finland had doubts whether it was in the EU's interests, given that not all European car manufacturers favoured measures, an embassy official said.

Swedish trade minister Johan Forssell said that dialogue between the Commission and China to find a solution would be very important.

The Commission will continue its investigation for another three months.

In one sign of compromise, the European Commission has signalled that it may consider a lower tariff for BMW's China-made electric Mini and Volkswagen's Cupra Tavascan, two sources with knowledge of the matter said.

AfriPrime App link:  FREE to download...

https://www.amazon.com/Africircle-AfriPrime/dp/B0D2M3F2JT

EU may cut China EV import tariffs for Volkswagen and BMW, sources say

MINI Cooper production line......

The European Commission has signalled to Volkswagen and BMW that it may consider lowering tariffs on the two carmakers' imports of China-made EVs, two sources with knowledge of the matter said.

The European Commission was willing to classify the two carmakers as so-called cooperating companies, the sources said, making them eligible for a 20.8% tariff on their China-made models, down from a tariff of 37.6% under current plans.

BMW's China-made electric Mini and Volkswagen's Cupra Tavascan, produced by the SEAT brand, were not part of Brussels' sample analysis in the run-up to the tariff announcement, which means they were automatically subjected to the highest tariff level.

If agreed, it would be a first, early compromise by Brussels on tariffs that will hurt some of Europe's top car manufacturers because they make cars in China and import them to the region.

The German car industry has also opposed the tariffs because it is worried about retaliation from China, where German automakers made a third of their revenue last year. U.S. carmaker Tesla has asked for its own tariff rate.

The decision was not yet final, said the two sources, who spoke on condition of anonymity due to the sensitivity of the matter. Volkswagen declined to comment. BMW was not immediately available for comment.

Brussels has until autumn to make a final decision on the tariffs, which are preliminary for now.

A spokesperson for the European Commission said it was analysing a number of requests from companies that were not yet producing battery-electric cars in China during the investigation, and would make a final assessment later in the process.

"The parties concerned will be informed of the Commission's proposal and will have the opportunity to comment in advance of the publication of any definitive measures," the person added.

AfriPrime App link:  FREE to download...

https://www.amazon.com/Africircle-AfriPrime/dp/B0D2M3F2JT

G7 trade ministers toughen talk on tackling unfair trade

Trade ministers from the Group of Seven (G7) major democracies said on Wednesday they would use their "trade tools" if needed to counter practices that distort the market, in a statement that hardened language compared with a previous communique.

The G7 ministers met in southern Italy after the European Union imposed tariffs this month on imports of electric vehicles made in China to try to protect the 27-nation bloc's motor industry from Chinese EVs that the EU says are heavily subsidised.

"We will continue to tackle non-market policies and practices, as well as harmful non-market excess capacity and other market distortions resulting from them," said the six-page G7 statement, which made no specific mention of China.

"To that end, we remain committed to effectively using our trade tools, and, as appropriate, develop new tools, to identify, challenge, and counter these practices, and to promote stronger international rules and norms, together with partners," it added.

Wednesday's statement took a tougher line than a final communique published last year after a G7 ministerial meeting in Japan, which focused on discouraging protectionism and market distortion more than on deploying trade tools.

Apart from tariffs, tools to curb unfair practices may include tighter rules to scrutinise foreign investments such as those the EU proposed early this year.

Britain, the only European G7 member that is not in the EU, signalled on Tuesday it was not ready to follow Brussels in imposing levies on Chinese EVs, saying its auto companies had not complained about any unfair practices from rivals.

The ministers, who met in the southern Italian region of Calabria, also said "economic resilience requires de-risking through diversification and reduction of critical dependencies," in an apparent reference to China's dominance of critical supply chains.

"We acknowledge that non-market policies and practices not only undermine the free and fair rules-based international economic order, but may also exacerbate strategic dependencies and vulnerabilities, and hinder emerging and developing countries' sustainable development," the statement said.

The G7 comprises Britain, Canada, France, Germany, Italy, Japan, and the United States, and the European Union is also invited to participate.

AfriPrime App link:  FREE to download...

https://www.amazon.com/Africircle-AfriPrime/dp/B0D2M3F2JT

US Tariffs at 60% Would Halve China’s Growth Rate, UBS Says

New tariffs of 60% on all Chinese exports to the US would more than halve China’s annual growth rate, according to new research from UBS Group AG, underscoring the risks for Beijing if former President Donald Trump returns to the White House.

Trump was reported earlier this year to be considering a flat 60% tariff on Chinese imports. If that happened, it would cut 2.5 percentage points from China’s gross domestic product in the year that follows, according to a report from UBS economists published Monday. Beijing is seeking to reach about 5% growth this year after the economy expanded 5.2% in 2023.

The forecast is based on an assumption that some trade is diverted via third countries, China doesn’t retaliate and other nations don’t join the US in imposing levies. Half of that drag would come from the drop in exports, while the rest would be from the hit to consumption and investment, they wrote.

“Over time, potentially more exports through and production in other economies can help reduce the impact of higher US tariffs, but there is also a risk of other countries raising tariffs on imports from China as well,” the economists led by Wang Tao said.

Exports have been a strong growth driver this year, with net exports accounting for 14% of the economy’s expansion so far and the trade surplus rising to a record last month. But the strength in exports has prompted complaints from trade partners, with more countries imposing tariffs or considering steps to counter the increasingly unbalanced nature of China’s trade.

Chinese retaliation could also raise the impact of the tariffs as it would push up import costs, the report said. In the event of another trade war, the risk and uncertainty alone could drive away US importers even if the tariffs are reduced eventually.

UBS forecasts China to expand 4.6% next year and 4.2% in 2026. That rate would be reduced to 3% for both years even with stimulus to counteract the effect of any tariffs, they estimated.

The government may use fiscal measures and ease monetary policy to mitigate the impact of a drastic tariff hike, with funding likely to come from issuing special treasury bonds, the report said. The Chinese central bank may let the currency depreciate 5% to 10%, the economists wrote.

AfriPrime App link:  FREE to download...

https://www.amazon.com/Africircle-AfriPrime/dp/B0D2M3F2JT

Why you're going to be hearing a lot about tariffs on China for the next 4 months

• Trump picked Sen. JD Vance as his running mate, shedding more light on his policy platform.

• Both Trump and Vance have supported strong tariffs on China to promote domestic manufacturing.

• Biden and some economists have said Trump's tariff policies would raise prices for consumers.

Former President Donald Trump has finally announced his running mate — and his choice means you'll likely hear a lot about tariffs on China in the coming months.

On Monday, Trump announced that Sen. JD Vance — a Republican from Ohio — was his vice-presidential pick. Vance, who previously described himself as a "Never Trump Republican," quickly aligned himself with Trump and GOP values once he took office in January 2023, embracing conservative views on issues including higher education, immigration, and tariffs.

The latter is an issue on which Vance and Trump particularly agree. Tariffs, or taxes on goods imported from another country, are intended to raise government revenue and bolster domestic manufacturing. As president, Trump was staunchly protectionist and used tariffs to enforce his "America First" policies — he imposed a series of tariffs on China that ultimately led to a trade war between the two economies.

Should Trump secure a second term, Americans would likely see a lot more action on that front. Vance has previously advocated for tougher trade policies against China, telling CBS News in May that "if you apply tariffs, really what it is, is you're saying that we're going to penalize you for using slave labor in China and importing that stuff in the United States."

"What you end up doing is you end up making more stuff in America, in Pennsylvania, in Ohio, and in Michigan," he added.

While Trump touted his tariffs as necessary to promote manufacturing in the US, a major consequence of his actions was higher prices for Americans due to less competition from foreign producers. According to the Tax Foundation, Trump's tariffs raised taxes by nearly $80 billion.

While President Joe Biden has kept most of Trump's tariff policies in place — in May, he announced an $18 billion tariff increase on Chinese goods, which increased taxes by $3.6 billion, the Tax Foundation said in June — Trump has even more planned in his new platform.

It means voters are likely to hear the two candidates sparring over trade policy in the months to come — and it could have significant implications for Americans already struggling with high inflation.

"I certainly agree that we need to apply some broad-based tariffs, especially on goods coming in from China and not just solar panels and EV stuff," Vance told CBS. "We need to protect American industries from all of the competition."

Trump vs. Biden on tariffs

If Trump wins the election, he wants to impose a 10% tariff on goods coming into the US and a 60% tariff on all imports from China.

Biden criticized that policy in June during the first presidential debate, saying that Trump was "calling for a 10% tariff on everything Americans buy, including food from overseas, vegetables, and other necessities."

"Economists tell us that that would cost the average American working family another $2,500 a year," Biden said. While estimates have varied on the impact the tariff increase would have on American families, 16 Nobel Memorial Prize-winning economists signed a letter at the end of June saying they're "deeply concerned" about the effect Trump's policies would have on the economy.

"Those tariffs overwhelmingly get passed on to consumers and increasing their prices and get fed down the supply chain — again, increasing prices to consumers," Joseph Stiglitz, who led the letter, previously told BI.

Biden's tariff policies have been more targeted than Trump's. In May, he called for tariffs on electric vehicles, steel, and aluminum coming from China and an increase in the tariff rate on semiconductors from 25% to 50% in 2025.

Both candidates have advocated for tariffs and promoted domestic manufacturing, but Trump and Vance would likely act much more aggressively on the issue if they won — meaning consumers might be on track for even higher prices.

AfriPrime App link:  FREE to download...

https://www.amazon.com/Africircle-AfriPrime/dp/B0D2M3F2JT