Tariff tensions between China and the EU: heading towards a trade war?

The trade tensions between China and the European Union have taken a new turn with the initiation of tariff measures by both parties. What initially seemed to be simple trade skirmishes have evolved into a situation that many fear could trigger a full-blown trade war in the coming months. Although so far the exchange figures affected by trade restrictions represent only between 1% and 1.5% of a trading volume that reached 740 billion in 2023, the escalation of tensions worries analysts and political leaders. The European Commission has taken a step forward by imposing provisional tariffs of up to 47.6% on electric vehicles manufactured in China, while this country has responded with an anti-dumping investigation into European pork imports. Both parties accuse each other of fueling the conflict, with Brussels justifying its measures under the rules of the World Trade Organization to seek to balance a trade deficit with China, especially in key sectors for the ecological and digital transition. The electric vehicle sector has become a flashpoint in this dispute, with China heavily promoting its production and the EU alleging that Chinese subsidies have distorted competition. Negotiations between the blocs will continue until November, when the EU will make a final decision. Germany, as one of the countries most affected by a potential escalation, has led discussions to seek diplomatic solutions to avoid open confrontation. Former Spanish Minister of Foreign Affairs Arancha González Laya highlights the firm yet respectful stance of the EU in this conflict, stating that the measures are temporary and that there is still room for negotiation within the parameters of the WTO. Meanwhile, China has responded with its own investigations, such as in the brandy sector, which many see as retaliatory measures. Potential future retaliations could affect key sectors such as high-displacement vehicles and aviation, with implications for brands like Mercedes, BMW, Porsche, and Airbus. The EU is preparing to defend its interests with additional investigations and the use of anti-coercion tools approved in 2023. Although China has threatened to take countermeasures, its limited influence in a context of massive exports could put it in a vulnerable position in case of escalation. The need to balance the trade deficit and protect the European industry from Chinese exports is becoming increasingly urgent. The proposal to establish joint ventures between Chinese and European companies, as well as the possibility of producing in Europe under equitable conditions, has emerged as an alternative to mitigate the conflict. However, the structural complexity of the Chinese economy and its focus on exports as the main engine of growth pose significant challenges in the search for a negotiated solution. The uncertainty about the future of trade relations between China and the EU persists, with the latent possibility of an escalation that could have global repercussions. The protectionist race triggered by trade tensions reflects the growing concern of countries to protect their industries and jobs, in a context of increasingly intense global competition. The upcoming decisions and moves of both parties will be crucial in determining the course of this dispute and its long-term impacts on the global economy.