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Due to EU-China EV tariff dispute, European automaker stocks plunged to recent lows.

TraderKnows
TraderKnows
06-14

Recently, the news that the EU will impose additional tariffs on Chinese electric vehicles has been widely reported, and China is expected to take corresponding measures. This has led to concerns in the market about European car manufacturers.

On Thursday, shares of some of Europe's largest automakers fell further amid uncertainty about how China will respond to new EU tariffs on imports of Chinese electric vehicles. This move by the EU aims to address what Brussels sees as excessive subsidies from Beijing.

Analysts suggest that China's countermeasures could directly target the automotive sector, increasing the risk for German luxury carmakers and potentially affecting other industries, such as the French brandy sector.

Daniel Schwarz, an analyst at Stifel in Frankfurt, said, "The risk is that China may take measures specifically targeting German original equipment manufacturers (OEMs) exporting to China."

However, some investors expect Beijing to respond in a balanced way, as Chinese automakers can still export to Europe, although with reduced profit margins.

Massimo Baggiani, founder of Niche Asset Management in London, said, "I think this is actually a flash in the pan. The tariffs are not severe for China but absolutely necessary for Europe. Without these measures, there would be significant impacts on the European economy, the development of electric mobility, and employment."

As of 1145 GMT, the European automotive index was down 2.3%, hitting its lowest level in more than four months, while the broader European STOXX 600 index fell 0.8%.

Volvo Cars, heavily impacted by China, saw the largest drop, plunging 6.2%, followed by German automakers Porsche, Volkswagen, Mercedes, and BMW, with declines ranging from 1.7% to 3.7%.

Brussels announced on Wednesday that it will impose additional tariffs on imports of Chinese electric vehicles starting in July, ranging from 17.4% for BYD to 38.1% for SAIC, on top of the standard 10% car tariff.

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Tariff

Tariffs are a type of tax that governments levy on imported and exported goods, typically appearing as a percentage of the value of the goods.

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