The European Union has a history of dealing with overcapacity issues, particularly in agriculture, with butter mountains and milk lakes being symbols of excess production resulting from the common agricultural policy. This policy guaranteed high prices to dairy farmers, leading to surreal outcomes. Ursula von der Leyen, the president of the European Commission, raised concerns about China’s “structural overcapacities” during a recent meeting with Xi Jinping in Paris. However, her focus was not on farming but on manufacturing.
Europe is apprehensive about the potential influx of electric vehicles and steel from China, which could threaten industries and jobs in the EU. 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 nearly 24%. In response to these trends, the EU is contemplating implementing “countervailing” tariffs to counteract the subsidies that have fueled China’s industrial growth. This move aims to protect European industries from being displaced by Chinese competitors who benefit from government support.