The European Union has a long history of dealing with overcapacity issues, such as butter mountains and milk lakes resulting from its common agricultural policy. This policy guaranteed high prices to dairy farmers, leading to excess production. During a recent meeting in Paris, the president of the European Commission, Ursula von der Leyen, expressed concerns to Xi Jinping about China’s “structural overcapacities” in manufacturing.
Currently, the EU is focused on addressing the flood of electric vehicles and steel coming from China. These products have the potential to displace industries and jobs within the EU. In just the first three months of this year, China’s steel exports have increased by over 28%, while exports of new-energy vehicles have risen by almost 24%.
To protect its industries and prevent job losses within the union, 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 taken to safeguard the economy and workforce of Europe.