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Keir Starmer should not join the EU’s trade war with China

Keir Starmer risks getting sucked into a trade dispute. Credit: Getty

August 21, 2024 - 4:00pm

A spectre is haunting Europe. Not communism, but the well-founded fear that the continent’s mighty car industry is under threat. The specific worry is China, which last year overtook Japan as the world’s biggest exporter of vehicles, having leapfrogged Germany the year before.

On Tuesday, the European Union announced its response: not a bold programme of investment to get EU manufacturers back on the front foot, but instead a package of punitive tariffs.

Tesla models manufactured in China will be hit with an additional import duty of 9% (on top of the current 10% tariff) while Chinese-owned firms face even higher rates, such as 19.3% for Geely and a punishing 36.3% for the state-owned SAIC.

The Chinese government isn’t happy, and is appealing to the World Trade Organisation. But whether or not the EU is engaged in illicit protectionism, it still has a great deal to protect. Automotive manufacturing is one sector in which Europe has held on to its industrial base. According to McKinsey, the sector accounts “for almost 7 percent of the region’s GDP” and is “directly or indirectly responsible for employing almost 14 million people”.

Europe’s vulnerability is that its advantages in diesel engine technology do not apply to the new world of electric vehicles. What’s more, Chinese motorists are switching to this technology much faster than their Western counterparts. More electric cars are sold in China than in the rest of the world put together. If electric is the future then, as things stand, it will be centred on China.

The EU’s move on tariffs therefore looks like a delaying tactic while European governments desperately work out what to do, though the bloc’s dispute with China could turn into a major headache for Keir Starmer. Thanks to Brexit, the UK can set its own trade policy: we don’t have to hike up our import duties in line with the EU. Last month, the new Labour government signalled that it wouldn’t.

And yet Labour is also pursuing a policy of “dynamic alignment” with the European Union. This means adopting EU regulation in some sectors of the economy with the hope of lowering trade barriers for UK exporters. Starmer should tread carefully. The EU has always sold access to its markets at a heavy price. No longer able to extract massive net contributions from the British taxpayer, Brussels will seek other ways of making us pay, such as insisting that we copy its tariffs on Chinese exports.

But would this be in our interests? Ultimately, the best protection against foreign competition is not trade barriers, but making a superior product. Through its own complacency, the West has allowed China to zoom ahead on electric cars. We do, however, have another chance when it comes to the next revolution: self-driving vehicles. This AI-powered technology has the potential to transform the way that we design, own, finance, insure, maintain and use cars. An enterprising nation like the UK would have every opportunity to generate commercial value by the bucketload — and not just in manufacturing.

Indeed, the new age of automated mobility could reconfigure the entire economy. And so the last thing we need to do is re-shackle ourselves to a lumbering regulatory behemoth.


Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.

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Hilton Holloway
Hilton Holloway
3 months ago

There is no global move to EVs. It is driven entirely by legislation, forced upon governments by activists. The best way for the next 15 years is probably moderately-sized hybrid petrol cars, not expensive and extremely heavy battery cars. As Toyota says, the batteries used for one long-range EV could be used for 60 hybrids.

UnHerd Reader
UnHerd Reader
3 months ago

Agreed. Will be interesting to see the ‘narrative shift’ by the Western political class and legacy media drones in the next year or so now it’s firmly established China has cornered and has a stranglehold over the EV battery market (in fact batteries in general). Suddenly EV batteries won’t be so critical to the glorious green revolution anymore. Given how thick and unscrupulous they are, will take much longer for them to admit their ideologically-driven stupidity has deindustrialised the West purely for the benefit of the PRC (with no tangible environmental improvements).

DenialARiverIn Islington
DenialARiverIn Islington
3 months ago

China, the world’s biggest market, is now more than 50% EV in sales.

Wake up. Sleepy.

Andrew Fisher
Andrew Fisher
3 months ago

The world’s biggest heavily controlled market, which is completely subservient to the political direction and interests of the Chinese Communist Party.

John Riordan
John Riordan
3 months ago

It is true that the top-down drive for electric cars is not to convert vast fleets of ICE cars to EV cars, but to radically reduce the number of cars on the road at all. While this is of course cynical and despicable, it is something that can be confronted by adapting to the political pressure in the form of supporting AI tech in EV/hybrid cars.

The point here is not to regard hybrids merely as a compromise between motorists who want to keep cars and governments who want to stop people driving cars: it’s to catalyse a move to a personal transportation system that is hugely superior to the existing car/road network system, and to kill off once and for all the cherished government-held notion that there’s a way to get us all onto public transport.

AI and robotics technology, which promises a raft of safety and performance improving driver aids in the near term, and self-driving cars in the longer term, is such a prospect. Hybrids are as capable of supporting that technology as EVs are, and that’s the real reason to see advanced hybrids as the next big step.

Matt M
Matt M
3 months ago

Is it a trick of perspective or is Two-tier Keir shorter than Macron?

Lancashire Lad
Lancashire Lad
3 months ago
Reply to  Matt M

Good point. I like the caption too:
Keir Starmer risks getting sucked into a trade dispute
Did they visit the Place de Pigalle?

Richard Rolfe
Richard Rolfe
3 months ago
Reply to  Lancashire Lad

Not really Macron’s scene, is it.

Simon Blanchard
Simon Blanchard
3 months ago
Reply to  Matt M

Exactly what I thought!

Ash Sangamneheri
Ash Sangamneheri
3 months ago

If you have owned and driven an EV, you don’t want to go back to ICE based vehicle. And in reality you don’t need that big a range/battery for 90% of journey. And you can charge the car at home when the tariff is low (£0.08), and with the increasing number of charging points and the speed of charging, range anxiety is less of an issue ( though the gov could double down on installing more fast charging points).

Europe is not exactly oil rich, so we would save a bundle by not having to pay for imported oil (mostly produced by dictatorship), so maybe that’s another strategic advantage.

We need as a nation to be for future facing, rather than holding on to the past.

Lancashire Lad
Lancashire Lad
3 months ago

Have you any idea what percentage of the car-owning population wouldn’t be able to home-charge their car?

Ash Sangamneheri
Ash Sangamneheri
3 months ago
Reply to  Lancashire Lad

If you can park your car, technically you should be able to install a charger there. That’s where the gov should step in and enable that.

Lancashire Lad
Lancashire Lad
3 months ago

You’ve clearly no idea of the housing infrastructure and parking arrangements of perhaps a majority of car drivers in the UK – and that’s even if you live here.

AC Harper
AC Harper
3 months ago

I refute your assertion that ‘you don’t want to go back’ because I am personally aware of people who have done so.

M To the Tea
M To the Tea
3 months ago

Please do not make a sense. Lol

Carmel Shortall
Carmel Shortall
3 months ago

“…imported oil (mostly produced by dictatorship), so maybe that’s another strategic advantage.”

Sure aren’t we all dictatorships now?

Robert Routledge
Robert Routledge
3 months ago

I have no idea how many people live in houses with front gardens or drives where it is possible to install and use cheap electricity points to charge E.V. but I greatly expect it’s considerably less than those that don’t!

John Riordan
John Riordan
3 months ago

There are plenty of people who bought an EV and say they wish they never had. Clearly it’s less simple than you say.

Prashant Kotak
Prashant Kotak
3 months ago

My issue is with where the second hand EV market will be in two or three years time. If charge points are not as easy or as common or as quick as petrol stations, the people who buy second hand and third hand cars, typically poorer people, are not going to buy EVs because they don’t make sense for them, so resale values plummet for EVs except for high-end Teslas, and the market grinds to a halt with premiums building on second hand petrol and diesel cars.

DenialARiverIn Islington
DenialARiverIn Islington
3 months ago

Labour is in a total bind on this one.

On the one hand, it wants to move towards net zero.

On the other hand, it wants to please the EU.

It can’t do both. It has plumped for net zero. Its words about the EU are a hollow sham.

Watch what they do. Ignore what they say.

UnHerd Reader
UnHerd Reader
3 months ago

Not sure about the idea that the UK should be investing in self-drive tech and associated R&D. “A.I.” for vehicles may not even be a desirable thing, given the legal and insurance implications. Karl Denninger at Market Ticker had some well reasoned arguments and data for this.

Andrew Fisher
Andrew Fisher
3 months ago

This article makes some valid points, but is wrong headed in several respects:

1) EVs are a limited technology for obvious reasons.

2) The EU may often be wrong headed and protectionist, but they have made in this instance a thorough investigation, and there is no serious doubt that the Chinese government has been heavily subsidising the EV industry through a variety of measures from direct fiscal support to providing cheap and free land, simpler planning regulations etc

3) Whatever the EV tariff regime on completed vehicles, if we continue to go hell for leather only for EVs, we strategically become far more dependent on China. for the whole supply chain.

4) AI revolution / self driving cars. Don’t make me laugh! Great Britain has a great record on scientific and technical innovation, but it has however a century or so of lamentable commercial application of this. This is simply not going to change by government fiat, any more than we have now generated a huge number of “new green jobs”. We are in a poor economic position, and are simply no position to compete with either the US or China on the next Tech revolution. Unfortunately, the unsexy reality is that we need to get back to economic basics, for example getting 5 million “mentally ill” etc people claiming benefits back to work.

John Riordan
John Riordan
3 months ago

I will be watching Labour closely on this one. This is a major issue: will Labour align with the EU and throw away a massive potential Brexit gain, or damage Britain’s economy even worse than it already has.