Bruegel describes EU’s decision to impose punitive tariffs on Chinese EVs ‘mistake’

(MENAFN) The European Union's decision to impose punitive tariffs on Chinese battery electric vehicles (EVs) is a misstep that could result in more harm than good, according to a report released Wednesday by the Brussels-based economic think tank Bruegel. The European Commission passed a vote last Friday to enact these tariffs, a move that has drawn criticism from several EU countries and auto industries. Critics warn that the tariffs could backfire, potentially undermining the EU's competitiveness in the global market.

Despite the Commission claiming it had the necessary backing from member states, the vote revealed significant divisions, with 12 EU members abstaining and five voting against the measure. The Bruegel report argues that the tariffs will have a negative impact on EU citizens by raising costs and will likely hurt the European automotive industry rather than protect it. By insulating European producers from global competition, the tariffs could weaken innovation and discourage collaboration with Chinese manufacturers, which are important for developing integrated value chains.

The report further emphasizes that the tariffs are a step toward increased fragmentation of global trade, a trend that brings economic risks and uncertainties, from which the EU itself will not be immune. As global supply chains become more fractured, the costs of trade disputes are likely to rise, and Europe may face negative consequences as a result. Bruegel highlights that the economic ramifications of such a trade move could be far-reaching, affecting not only the automotive industry but broader economic relations between the EU and China.

Additionally, the report warns of potential spillover effects from this dispute, which could strain EU-China bilateral relations. Trade tensions often escalate, leading to broader economic and political consequences that could disrupt collaboration between the two powers. However, the report concludes that there is still time for the EU to reconsider its decision, suggesting that a more measured approach could prevent unnecessary damage to its industries and international relationships.

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