The Battle Against Overcapacity: EU Takes on China’s Steel and EV Exports

The European Union has a long history of dealing with overcapacity issues, such as butter mountains and milk lakes caused by its common agricultural policy. This policy guaranteed high prices to dairy farmers, leading to excess production. However, the EU’s current focus is on the flood of electric vehicles and steel coming from China.

During a recent meeting in Paris, Ursula von der Leyen expressed concerns to Xi Jinping about China’s “structural overcapacities” in manufacturing. The EU is worried that the influx of products from China has the potential to displace industries and jobs within the EU. In particular, China’s steel exports have increased by over 28% in the first three months of this year, while exports of new-energy vehicles have risen by almost 24%.

To address this issue, the EU is considering imposing “countervailing” tariffs to counterbalance the subsidies that have contributed to the growth of China’s industry. This action is being considered to protect European industries and prevent job losses within the union. The EU is taking steps to address the overcapacity issues in manufacturing to safeguard its economy and workforce.