An EU Trade War with China? — On the EU’s Strategy to Be Competitive on EVs & Sustainability

In recent months and years, the European Union has recalibrated its trade policy with China based on a “more mature” approach, according to Economics Chief Paolo Gentiloni.

Aware of the challenges posed by Chinese state subsidies, particularly in electric vehicles (EVs) and green energy, the EU is working to safeguard its economy without fully severing trade ties.

In this, it diverges from the approach seen in the US, starting with former US President Donald Trump and continuing under current president, Joe Biden. Unlike the US, however, the EU is opting for targeted rather than sweeping tariffs.

While keen to avoid a disruptive decoupling, the EU’s strategy underscores its commitment to open trade while addressing the competitive pressures arising from China’s state-supported industries.

Let me explain.

Photo by Hanny Naibaho on Unsplash

According to the mentiioned Gentiloni, the EU will adopt a tailored response to Chinese subsidies, demonstrating a more diplomatic approach to shared trade challenges.

Additionally, the US Inflation Reduction Act has sparked EU concerns over rising protectionism, signaling further complexity in transatlantic economic relations. The EU’s open-market structure…