Earlier this month, the EU began to enforce its tariffs on China for electric vehicle imports, yet the dated practice of taxing products aimed at creating fairer industry competition will probably have the exact opposite effect on Europeans.
On July 4, America celebrated Independence Day, marking the historic moment in 1776 when the 13 American colonies declared their independence from British rule.
In a twist of historical parallel, Europe marked this same date in 2024 with its own declaration of economic independence – specifically, independence from a flood of cheap Chinese EVs, achieved through the imposition of new and steep tariffs.
The EU-imposed levies on Chinese EV imports will vary across companies and can reach as high as 48 per cent for car makers deemed unco-operative with a recent EU probe.
Eric Mamer, a commission spokesman, described the higher duties as “a means to correct an imbalance”.
The case for tariffs
To be sure, the EU’s decision is driven by concerns about unfair subsidies that benefit Chinese EV makers. And these state hand outs are substantial, without doubt.
The Centre for Strategic and International Studies, a US think tank, estimates that from 2009 to 2021, the Chinese government ploughed more than $125 billion into the EV sector, making China’s industrial spending much higher than that of any other major global economy, the think tank said.
More pointedly, the European Commission’s investigation found that Chinese EV producers receive favourable terms, including preferential export insurance, tax exemptions and government-provided goods and services at below-market rates.
The EU concluded (albeit provisionally) on June 12 that the advantage of these subsidised imports could harm the European economy, leading to the imposition of higher tariffs on July 4.
Collective cost
Using tariffs is an old solution; everyone should know it is risky. European consumers will probably face higher EV prices immediately after the levies on Chinese imports. That limits consumer adoption and reduces choice in the EV market.
The bigger problem is that despite these tariffs, Chinese companies are expected to remain competitive due to their fundamentals. They have cheaper production costs, with or without government subsidies, compared with their European counterparts.
Such is the viewpoint of the financial market, which drove a 9 per cent surge in BYD’s shares – not the dip one might expect – after the EU tariff announcement.
Wall Street analysts and investors seem confident about BYD’s technological lead and manufacturing scale continuing.
Even within Europe, the view is not unified. Several European car makers oppose the tariffs, fearing potential trade retaliation. German Chancellor Olaf Scholz warned of those economic repercussions when he said that such measures “ultimately make everything more expensive and everyone poorer”.
But the problems do not stop there. The biggest risk is that the EU’s tariffs will push Chinese manufacturers to localise production in Europe, instead of just exporting vehicles to the 27-member bloc.
This strategic shift will ultimately create the kind of competitive advantages for China that the EU wants to avoid. Already, BYD this week agreed to build a $1 billion plant in Turkey, which is in a customs union with the EU.
As China’s economy slows, Chinese EV makers must find new markets. They are now forced to accelerate their global footprint by establishing manufacturing bases abroad. This mirrors the trajectory of Japanese and Korean car makers such as Toyota and Hyundai in response to US tariffs in the past. History repeats itself.
Already, Chinese car makers have started ploughing money into European factories – especially in Hungary, which maintains friendly relations with China.
The new EU tariffs will expedite this process of globalisation, inadvertently sharpening the competitive edge of Chinese car makers. The levies will backfire.
What will happen inside China? The country’s top-tier car makers such as BYD, SAIC or Geely will speed up the consolidation of their domestic market to strengthen their financial base, so they can invest even more aggressively in European manufacturing capabilities, for it is a costly and lengthy endeavour.
The result will be a total shakeout of China’s EV sector, reducing the number of manufacturers from more than 200 to about 10 big players by 2030, one can easily imagine, either through mergers and acquisitions or bankruptcies.
Many of these companies are already suffering from intense price competition and slowing sales due to a weakening domestic economy. Few are going to survive. But the big will become even stronger.
A win-win?
To avoid the gloom, Beijing and Brussels must re-evaluate their own strategy. Instead of erecting trade barriers, the EU needs to address the root causes of its declining competitiveness in the automotive sector in general.
The battle is not about tariffs but technological innovation for what is needed ahead. European car makers must excel in battery technology, software and chip design to compete on the global stage. And many do not right now.
Globally, the automotive industry’s future lies in software-driven vehicles, wireless networks and autonomous driving.
Short-term protection through tariffs will not save European giants such as Volkswagen or Mercedes in the long run. EU car companies should focus on the unique attributes that endear consumers to their brands and rethink the driving experience through advanced software features.
The automotive sector is crucial for the European economy, and its collapse would have catastrophic effects on the entire continent. That is what is at stake.
Fortunately, China will probably seek negotiations to avoid an outright trade war, given Washington’s hawkish stance towards China. Beijing knows it needs allies in western economies, not another enemy.
Technological partnerships and collaborative innovation with the EU could offer a more constructive path forward. If China leads in battery technology, why not encourage a sort of reverse technological transfer back to Europe?
If western companies lack the capital to build advanced plants, get Chinese companies to build factories on the continent and provide local jobs in Europe.
Since people have been complaining about forced technological transfer from the West to China, maybe it is high time for Europe to copy China’s playbook and reverse the situation?
And, as the EU’s levies are not set to become permanent until November, there remains a window for diplomatic solutions.
Brussels and Beijing must recognise the mutual benefits of co-operation over confrontation. For China, this means ensuring its export markets remain accessible while addressing legitimate concerns about its trade practices is crucial.
For the EU, the focus should be on enhancing its technological capabilities and maintaining open, competitive markets. Because ultimately, while aiming to protect domestic industries, the EV tariffs risk unintended consequences – including higher consumer prices and the unanticipated expansion of Chinese manufacturers abroad.
Howard Yu is the Lego® professor of management and innovation at IMD and heads IMD's Centre for Future Readiness.
About Karol Nawrocki
• Supports military aid for Ukraine, unlike other eurosceptic leaders, but he will oppose its membership in western alliances.
• A nationalist, his campaign slogan was Poland First. "Let's help others, but let's take care of our own citizens first," he said on social media in April.
• Cultivates tough-guy image, posting videos of himself at shooting ranges and in boxing rings.
• Met Donald Trump at the White House and received his backing.
Results
2pm: Handicap Dh 90,000 1,800m; Winner: Majestic Thunder, Tadhg O’Shea (jockey), Satish Seemar (trainer).
2.30pm: Handicap Dh120,000 1,950m; Winner: Just A Penny, Sam Hitchcott, Doug Watson.
3pm: Handicap Dh105,000 1,600m; Winner: Native Appeal, Pat Dobbs, Doug Watson.
3.30pm: Jebel Ali Classic Conditions Dh300,000 1,400m; Winner: Thegreatcollection, Adrie de Vries, Doug Watson.
4pm: Maiden Dh75,000 1,600m; Winner: Oktalgano, Xavier Ziani, Salem bin Ghadayer.
4.30pm: Conditions Dh250,000 1,400m; Winner: Madame Ellingtina, Richard Mullen, Satish Seemar.
5pm: Maiden Dh75,000 1,600m; Winner: Mystery Land, Fabrice Veron, Helal Al Alawi.
5.30pm: Handicap Dh85,000 1,000m; Winner: Shanaghai City, Jesus Rosales, Rashed Bouresly.
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
Company Profile:
Name: The Protein Bakeshop
Date of start: 2013
Founders: Rashi Chowdhary and Saad Umerani
Based: Dubai
Size, number of employees: 12
Funding/investors: $400,000 (2018)
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
If you go
The Flights
Emirates and Etihad fly direct to Johannesburg from Dubai and Abu Dhabi respectively. Economy return tickets cost from Dh2,650, including taxes.
The trip
Worldwide Motorhoming Holidays (worldwidemotorhomingholidays.co.uk) operates fly-drive motorhome holidays in eight destinations, including South Africa. Its 14-day Kruger and the Battlefields itinerary starts from Dh17,500, including campgrounds, excursions, unit hire and flights. Bobo Campers has a range of RVs for hire, including the 4-berth Discoverer 4 from Dh600 per day.
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
RESULTS
Argentina 4 Haiti 0
Peru 2 Scotland 0
Panama 0 Northern Ireland 0
Killing of Qassem Suleimani
The biog
Name: Ayisha Abdulrahman Gareb
Age: 57
From: Kalba
Occupation: Mukrema, though she washes bodies without charge
Favourite things to do: Visiting patients at the hospital and give them the support they need.
Role model: Sheikha Fatima bint Mubarak, Chairwoman of the General Women's Union, Supreme Chairwoman of the Family Development Foundation and President of the Supreme Council for Motherhood and Childhood.
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Stage 5 results
1 Tadej Pogacar (SLO) UAE Team Emirates 3:48:53
2 Alexey Lutsenko (KAZ) Astana Pro Team -
3 Adam Yates (GBR) Mitchelton-Scott -
4 David Gaudu (FRA) Groupama-FDJ 0:00:04
5 Ilnur Zakarin (RUS) CCC Team 0:00:07
General Classification:
1 Adam Yates (GBR) Mitchelton-Scott 20:35:04
2 Tadej Pogacar (SlO) UAE Team Emirates 0:01:01
3 Alexey Lutsenko (KAZ) Astana Pro Team 0:01:33
4 David Gaudu (FRA) Groupama-FDJ 0:01:48
5 Rafał Majka (POL) Bora-Hansgrohe 0:02:11
Hales' batting career
Tests 11; Runs 573; 100s 0; 50s 5; Avg 27.38; Best 94
ODIs 58; Runs 1,957; 100s 5; 50s 11; Avg 36.24; Best 171
T20s 52; Runs 1,456; 100s 1; 50s 7; Avg 31.65; Best 116 not out
THE SPECS
Engine: AMG-enhanced 3.0L inline-6 turbo with EQ Boost and electric auxiliary compressor
Transmission: nine-speed automatic
Power: 429hp
Torque: 520Nm
Price: Dh360,200 (starting)
UAE currency: the story behind the money in your pockets
RESULT
Manchester United 2 Burnley 2
Man United: Lingard (53', 90' 1)
Burnley: Barnes (3'), Defour (36')
Man of the Match: Jesse Lingard (Manchester United)
The five pillars of Islam
The Greatest Royal Rumble card as it stands
The Greatest Royal Rumble card as it stands
50-man Royal Rumble - names entered so far include Braun Strowman, Daniel Bryan, Kurt Angle, Big Show, Kane, Chris Jericho, The New Day and Elias
Universal Championship Brock Lesnar (champion) v Roman Reigns in a steel cage match
WWE World Heavyweight ChampionshipAJ Styles (champion) v Shinsuke Nakamura
Intercontinental Championship Seth Rollins (champion) v The Miz v Finn Balor v Samoa Joe
United States Championship Jeff Hardy (champion) v Jinder Mahal
SmackDown Tag Team Championship The Bludgeon Brothers (champions) v The Usos
Raw Tag Team Championship (currently vacant) Cesaro and Sheamus v Matt Hardy and Bray Wyatt
Casket match The Undertaker v Chris Jericho
Singles match John Cena v Triple H
Cruiserweight Championship Cedric Alexander v tba
The story in numbers
18
This is how many recognised sects Lebanon is home to, along with about four million citizens
450,000
More than this many Palestinian refugees are registered with UNRWA in Lebanon, with about 45 per cent of them living in the country’s 12 refugee camps
1.5 million
There are just under 1 million Syrian refugees registered with the UN, although the government puts the figure upwards of 1.5m
73
The percentage of stateless people in Lebanon, who are not of Palestinian origin, born to a Lebanese mother, according to a 2012-2013 study by human rights organisation Frontiers Ruwad Association
18,000
The number of marriages recorded between Lebanese women and foreigners between the years 1995 and 2008, according to a 2009 study backed by the UN Development Programme
77,400
The number of people believed to be affected by the current nationality law, according to the 2009 UN study
4,926
This is how many Lebanese-Palestinian households there were in Lebanon in 2016, according to a census by the Lebanese-Palestinian dialogue committee
Killing of Qassem Suleimani
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
Read more about the coronavirus
More from Neighbourhood Watch:
The specs
Engine: 0.8-litre four cylinder
Power: 70bhp
Torque: 66Nm
Transmission: four-speed manual
Price: $1,075 new in 1967, now valued at $40,000
On sale: Models from 1966 to 1970
Masters%20of%20the%20Air
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Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
UAE currency: the story behind the money in your pockets
Six large-scale objects on show
- Concrete wall and windows from the now demolished Robin Hood Gardens housing estate in Poplar
- The 17th Century Agra Colonnade, from the bathhouse of the fort of Agra in India
- A stagecloth for The Ballet Russes that is 10m high – the largest Picasso in the world
- Frank Lloyd Wright’s 1930s Kaufmann Office
- A full-scale Frankfurt Kitchen designed by Margarete Schütte-Lihotzky, which transformed kitchen design in the 20th century
- Torrijos Palace dome
Company Profile
Company name: OneOrder
Started: October 2021
Founders: Tamer Amer and Karim Maurice
Based: Cairo, Egypt
Industry: technology, logistics
Investors: A15 and self-funded
Killing of Qassem Suleimani
Mohammed bin Zayed Majlis
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Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
