The Load Star — 2025-02-10
Automotive Industry
Donald Trump’s tariff plan could spectacularly backfire, forcing Europe closer to China as it seeks to hit environmental targets, it was claimed.
China is hunting alternative markets for its substantial output of electric vehicles as it faces up to exports to the US being hit by a 10% tariff.
However, the European Union is also facing potential tariffs, with the US president having stated that his country had been “treated very badly” by lawmakers in Brussels.
Anthony Gardner, former ambassador to the EU, now senior advisor to Brunswick Group, told Bloomberg the bloc had learned from Mr Trump’s first term and had developed a far more robust series of responses.
He added he had seen a “remarkable shift away from China”, and Europe moving much closer to the US, but now, he warned, the US could end up pushing the trading bloc, with its 446m consumers, toward China. He pointed to Mr Trump’s threats towards Greenland, which he suggested could leave EU members saying, “you know what, China does not look so bad now”.
And one area where this could benefit both may be electric vehicles (EV).
Europe is targeting a ban on emissions from new vehicles by 2035, using a graduated approach with a 15% reduction this year, followed by 55% in 2030.
Meeting that target has faced strong scrutiny; hauliers have slammed the plans, with one operating in Europe telling The Loadstar that even if they could finance an EV truck purchase, charging points were not sufficiently available.
In September major firms including Volvo, Uber and Maersk, and EV manufacturers Polestar and Rivian urged Brussels not to reopen the plans, claiming they were feasible as long as they had “regulatory stability”.
Scepticism around the capacity of the domestic market to, not only manufacture at scale but to match China on pricing, still swirls, but China could prove a salve to European needs, particularly if EU governments feel cut off from the US.
Mr Gardner said: “Divergence in what the US imposes on China, what Europe imposes on China, almost certainly will drive displacement of significant Chinese trade to where Europe is one of the last and richest markets available for Chinese exports.”
“You have seen a lot of analysts showing that even with tariffs, Chinese manufacturers make higher profit in the European market than domestically. Diversion will drive a lot of increased exports at a time of frank fragmentation in Europe and industrial weakness.”
He said Europe held a strong hand, with China just as in need of a market to sell into as Europe was in need of a supplier base, noting that the EC could make access to its “relatively open market” conditional on China “actually manufacturing in Europe”.