China Escalates Trade Dispute, Lodges Complaint With WTO Over European EV Tariffs

China escalated its trade dispute with the European Union (EU) on Monday by lodging a formal complaint with the World Trade Organization (WTO) regarding the EU’s recently imposed tariffs on Chinese-made electric vehicles. 

The Details: China’s diplomatic mission to the WTO said it "strongly opposes" the EU’s decision to implement tariffs of up to 35% on Chinese EVs. China claimed the tariffs are "protectionist" and "an abuse of trade remedies" in violation of WTO rules. 

The European Union raised tariffs on Chinese EV imports last month in response to what it sees as unfair business practices that undercut European industry. The tariffs will be in effect for five years and affect Chinese automakers including Li Auto, Inc. (NASDAQ:LI) and NIO, Inc. – ADR (NYSE:NIO). 

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Chinese Premier Li Qiang commented on trade policies Tuesday at the opening of the China International Import Expo in Shanghai, one day after lodging the complaint with the WTO. Bloomberg reported Li appeared to take a jab at the U.S. and EU trade policies, mentioning "various acts of dishonesty," without going into detail.

Malaysian Prime Minister Anwar Ibrahim commended China for its handling of trade in the face of "obscure, condescending and unfair trading practices" at the same event on Tuesday. 

Why It Matters: The U.S. and the EU have placed high import duties on China-made EVs as a way to keep the cheaper vehicles from flooding the market and harming the domestic automotive industries. Both countries are opposed to Chinese government subsidies which support China's EV makers and enable the vehicles to be sold at lower prices than domestically produced EVs. 

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