The Emerging Trade War Between The EU And China: Tariffs as high as 36%

China has come up with a tit for tat approach as it announces import duties to be imposed on dairy products from the European Union (EU). 

What Caused China To Take This Step?

Last week, the EU imposed additional tariffs on China- made Electric Vehicles (EV). These tariffs were as high as 37.6%. The reason for this move was given as the fact that the Chinese EV firms receive a lot of financial support from their government in the form of subsidies. Owing to this, they are able to provide their products for extremely cheap in the EU, and the local manufacturers are not able to compete with this. Also, the EV market share of China in the EU has risen from 9% last year to almost 11% this year. This is a matter of concern. 

What Was China’s Response?

China moved the WTO (World Trade Organization) over the imposition of high tariffs and asked for a relief. The Chinese side claimed that this allegation was baseless. The two sides have till November to fix this, else the tariffs will be fixed for a duration of the next 5 years. 

What Probe Has China Initiated? 

China, in retaliation, has initiated a probe and announced tariffs on dairy products that are imported from the EU. They have included this for fresh as well as processed cheese, blue cheese and various other milk and cream products. Their basis for this action is that subsidy programs are run by the governments of various EU countries like Belgium, Croatia, Finland, Italy and others, which place them too at an undue advantage when they are compared to their Chinese counterparts. 

What Are The Expected Consequences? 

The two sides are trying to avoid any sort of direct confrontation as that might spark an outright trade war. However, how the events actually unfold, and how the trade dynamics change in this conflicted and divided world, is yet to be seen.