Today’s Top Story

European Union member states approved tariffs of up to 45 percent on Chinese-made electric vehicles, or EVs, in a contentious vote today. Just 10 countries voted in favor of the tariffs, while 12 abstained and five voted against, including Germany, the EU’s largest economy and biggest car manufacturer. (Reuters)

Our Take

Back in 2017, we ran an article on China’s ambitions to become “this century’s Detroit,” capitalizing on the economic opportunity that EVs presented. “China has taken a big but ultimately safe bet on the future of transportation,” Ashley Feng and Sagatom Saha wrote then. “[T]he most likely scenario is that Chinese companies will flood the market to secure a monopoly and push out competitors, as Chinese solar panel companies have done for the past decade.”

Indeed, that is exactly what has happened, and despite Beijing’s ambitions being well-documented, Western carmakers were still caught unprepared to compete with Chinese-made EVs. In many ways, this is simply Economics 101: As heavyweights in an industry grow complacent and less innovative, emerging companies disrupt the status quo and become the new industry leaders.

As Feng and Saha noted, the problem is similar to the one the EU faced a decade ago, when Chinese-made solar panels rapidly came to dominate the industry. In that case, the EU was too slow to act and essentially ended up ceding the market to Chinese producers. Now, the EU seems determined not to make the same mistake, and the tariffs passed today, however contentiously, suggest that Brussels is willing to move aggressively to protect its own manufacturers from unfair trade practices.

Still, there are clear risks to the EU’s approach, not least being the diplomatic implications for EU-China relations. Protective tariffs can also hurt European carmakers that manufacture EVs in China for export back to Europe, in addition to raising costs for consumers. Those carmakers and other European businesses are now also likely to face retaliation from China. And, of course, there’s a very real possibility that the EU waited too long to make this move once again, meaning these tariffs may end up hurting EU consumers without helping EU workers. Put simply, Brussels is relying on a blunt instrument to solve a problem that requires a more sophisticated approach, if it is still even solvable at all.

The fact that the EU is willing to take the risk, then, highlights the broader shift in how the West is approaching global trade. China’s determination to solve its own domestic economic problems by exporting its overcapacity confronts the West with the threat of a China Shock 2.0, only this time in the cutting edge technologies that will shape the green transition, instead of in the lower-end manufactured goods that characterized the first China Shock in the 2000s. The domestic political ramifications of that happening again explain why Brussels and Washington are now adopting a mercantilist and protectionist approach to trade—and specifically trade for the green transition—even at the risk of greater tensions with and retaliation from Beijing.

For more:

Why EV protectionism is a huge gamble for the United States.
How Chinese EVs put Germany—and Volkswagen—in a bind.
How China is cornering the EV market in the Global South.

On Our Radar

Jamaica’s security minister said he welcomes a campaign led by a group of U.S. state attorneys general to pressure Congress to pass a bill that would help curb illicit arms trafficking from the United States to the Caribbean. The bill—known as the Caribbean Arms Trafficking Causes Harm, or CATCH, Act—has already been introduced in both houses of Congress but has not been passed by either.

For decades, the Caribbean has been grappling with the illegal inflow of firearms from the United States, a problem that also affects one of Washington’s closest allies, France, through its Caribbean island territories. As Aude Darnal wrote recently, Caribbean countries can and should seek to use France’s geographical presence in the region as leverage to get the U.S. to seriously address the issue.

The U.S. Guns Destabilizing the Caribbean Are a Problem for France, Too

Sept. 26, 2024 | The U.S. domestic gun problem is also fueling an illegal gun-trafficking problem in the Caribbean. France can do more to address it. Read more.

Moldova’s national police chief said yesterday that more than 130,000 people in the country had been bribed by a pro-Russian network to vote in favor of Russia-friendly candidates in elections later this month, as well as against a referendum on whether Moldova should seek to join the EU. President Maia Sandu, a pro-Western candidate, is running for reelection in the Oct. 20 vote.

Russia has long been accused of interfering in Moldovan politics, and its campaign has only ramped up in recent years, with Moscow spending tens of millions of dollars to boost politicians and organizations aiming to turn the country away from the West and toward Russia. As Frida Ghitis wrote in May, the urgency of the Russian influence operations is increasing as Moldova makes strides in its push to join the EU.

Russian President Vladimir Putin speaks to the head of the Moldovan autonomous region of Gagauzia.

Russia Is Trying to Conquer Moldova From Within

May 16, 2024 | Russia may not need tanks to subjugate Moldova. Instead, the Kremlin can simply interfere in its politics. In fact, it’s already doing so. Read more.

Mexican President Claudia Sheinbaum, the country’s first female leader, announced a package of proposed reforms yesterday aimed at addressing discrimination and violence against women. Still, as Carin Zissis wrote last month, Sheinbaum—who took office Tuesday—is reliant on the political movement built by her predecessor, President Andres Manuel Lopez Obrador, who did more to build barriers with the women’s movement than fight for it.

This year’s Nobel Peace Prize will be awarded next week, although some nominators are reportedly debating not awarding it at all, given the growing number and intensity of conflicts around the globe.

As Paul Poast wrote two years ago, though, despite some unforced errors and shortcomings, the prize still matters: “The awarding of the Nobel Peace Prize is a celebration of what humankind aspires to, even if we often do—and perhaps always will—fall short.”

Upcoming Elections

Tunisia heads to the polls Sunday to vote in a presidential election. Three years after enacting a self-coup, President Kais Saied is all but guaranteed reelection, having prevented any real political contest from taking place.

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