Europe Must Avoid ‘Disaster’ of Trade Decoupling as It Eyes China Tariffs, EU’s Economics Chief Says
The European Union must steer clear of a damaging decoupling of global trade as it considers imposing tariffs on Chinese electric vehicles and other goods, the bloc’s economic chief stated on Wednesday.
“I think that as far as Europe is concerned, we need a more mature attitude in our trade, securing our economy … especially with China,” European Commissioner for Economy Paolo Gentiloni told CNBC’s Silvia Amaro.
Gentiloni highlighted the EU’s ongoing anti-subsidy investigations into the electric vehicle market and wind turbines. These probes address concerns that China is flooding global markets with green energy products.
These investigations aim to determine whether subsidies provided by the Chinese government to domestic firms are “disrupting any chance for European companies,” Gentiloni explained.
“But this is not leading us to a theory of decoupling global trade, which would be disastrous for both parties involved,” he said.
“The characteristic of the EU economy is to be more open, more influenced by trade, and less dependent on internal consumption alone. This is the economic reason why it is in the European Union’s interest to keep the doors of trade open.”
On Tuesday, the U.S. announced significant tariff increases on $18 billion worth of Chinese imports, including EVs, lithium-ion batteries, solar cells, steel, and aluminum.
China argues that its EV market is expanding due to innovation rather than state subsidies, and points out that the U.S. Inflation Reduction Act — which has also raised protectionism concerns among EU officials, including Gentiloni — is subsidizing U.S. manufacturing.
Meanwhile, several EU nations are apprehensive about potential Chinese retaliatory trade measures affecting critical domestic industries, from German automotives to French cognac.
This concern arises as the bloc seeks to recover from years of sluggish economic growth and a shallow recession in the latter half of 2023.
On Wednesday, Gentiloni expressed optimism about the outlook for the year, following a “very, very difficult 2023” marked by economic stagnation, increased savings, and uncertainty stemming from the ongoing Russia-Ukraine war.
“Gradually, activity is accelerating, and the main driver will be private consumption. At the same time, we have two other factors that are very positive,” he told CNBC.
“Inflation is indeed declining. And employment is still high, very high, and it will continue to increase in the coming months.”