For some context, this relates to the earlier headline: China now tries to play nice with the EU with latest trade rulings
As mentioned then, China has moved forward to finalise 11.7% tariffs on EU dairy products starting from 13 February. It sounds bad initially but context matters here. The provisional rates for these tariffs were between 21.9% to 42.7% back in December. So, China has already worked out a compromise with European dairy industry associations to reduce the proposed tariffs.
The response by the EU now is that they will “consider all appropriate next steps, including possible proceedings before the WTO”. That as they feel that there is “insufficient evidence” for China to launch the anti-subsidy probe on EU dairy products.
I’d take this response as a mere political facade as it is clear that Beijing reducing the levies is akin to an act of goodwill of sorts. And both sides know that this is an act that they have to keep up at least for the time being. That until they start to turn their backs on each other again.
Zooming out, the tariffs here are a response from China to EU tariffs on China-based EV makers. And on that front, Beijing is also relaxing their stance of keeping a hard line in not allowing domestic EV makers to negotiate deals with the EU individually.
That after the EU approved a request by Volkswagen in exempting its China-made Tavascan SUV coupe from import tariffs. The exemption was made in exchange for an agreed minimum sales price and quota for the vehicle.
So, both sides are actually working out compromises while still trying to put up a show that they are “disagreeing”. All that of course to appease the public and certain lawmakers who might not agree with just taking things laying down.
In the bigger picture, both the EU and China have more important things to focus on. That being their continued reliance on each other on trade in a time where US tariffs are weighing hard on both sides. From last week: US tariffs impact show up in German and French trade numbers, but is there a bigger worry?
This article was written by Justin Low at investinglive.com.