The Battle Against Overcapacity: EU Takes on China’s Steel and Car Exports

The European Union has a longstanding history of dealing with overcapacity issues, particularly in agriculture. Its common agricultural policy guaranteed high prices to dairy farmers, resulting in excess production. However, the EU’s current concern is focused on the flood of electric vehicles and steel coming from China. This influx of products has the potential to displace industries and jobs within 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 almost 24%. 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 considered to protect European industries and prevent job losses within the union.

During a recent meeting in Paris, Ursula von der Leyen expressed concerns about China’s “structural overcapacities” in manufacturing to Xi Jinping. While Europe has previously dealt with overcapacity in agriculture, its current worry is focused on the influx of products from China. The EU is taking steps to address the overcapacity issues in manufacturing to safeguard its economy and workforce.