The Kiel Institute for the World Economy (Kiel IfW) has calculated that the anti-China tariffs the EU is going to impose are worth about $4 billion. That is the effect of a 20% tariff, as it is speculated, on electric vehicles (EV). “The volume of imported electric cars from China would fall by 25%. Converted to the almost 500,000 vehicles imported in 2023, this corresponds to an estimated 125,000 units worth almost $4 billion.”
Such a gain is the proverbial “mess of pottage,” a game which is not worth the risk. China is the most important trading partner of the European Union: In 2023, the EU and China traded goods worth €739 billion (imports and exports). This represents 15% of all EU trade in goods.
Since China will certainly retaliate, the EU is jeopardizing growth in its largest trade market to boost growth in a sector, E-cars, without a future. The IfW, in fact, explains that “the decline” in imported Chinese EV “would largely be offset by an increase in production within the EU and a lower volume of EV exports, which would likely mean noticeably higher prices for end consumers.” That is, E-cars will remain a luxury item and will never become a mass product. Will German decision-makers draw consequences from the IfW study?
