Starting a trade war with the world’s largest car market is not a very wise decision for any country that has a strong auto industry, much less for the European Union, which is home to some of the most important carmakers in the world.
However, this is really on the verge of happening, as the EU has imposed duties on Chinese solar panels, infuriating the government of the world’s most populous country, which retaliated by launching an anti-dumping investigation into imported European wine.
China is now threatening to extend the trade dispute with the EU to luxury cars as well, increasing tension between the two economic superpowers and potentially harming sales of expensive cars in the world’s largest market of such vehicles.
According to two European sources with knowledge of the situation cited by Financial Times, the Chinese are considering an official complaint to Brussels over luxury cars imported from the EU. If China decides to increase tariffs on luxury cars, German carmakers in particular would be worst hit, as they dominate China’s luxury market.
“I can confirm that the Chinese are threatening to make a complaint but we are not sure how serious the threat is. It could simply be part of their strategy to force us to reach a deal on other trade matters,” said a senior European Commission official.
Booming luxury car sales in China make the country a big growth market for global carmakers. German brands BMW, Mercedes-Benz, and Audi lead the market, but other European carmakers like Porsche, Ferrari, Lamborghini, Jaguar and Land Rover are also benefitting from a surge in China sales.
Almost 500,000 passenger cars were imported from Europe to China last year, according to the European car industry association (ACEA). Current tariffs on cars imported into China stand at 25 percent. Total bilateral trade between China and the EU is €433.7 billion ($575.5 billion).
By Dan Mihalascu
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