Every country loves to have a surplus of trade going to other countries for foreign exchange and that is what free trade is important issue to every President of every country. The President of the country will travel to every country where the host country spends goods in order to ensure good relations and hopefully free trade. The other country has business people who over time develop competing goods and they believe theirs should be sold without tariffs.

In an article by Zhang Yan, Joe Cash and Christina Amann of Reuters, for decades European vehicles have been sold in China, but Chinese have built up expertise in EV vehicles. These Chinese automakers have urged Beijing to hike tariffs on imported European gasoline-powered cars in retaliation for Brussels’s curbs on exports of Chinese-made EV, the state backed Global Times newspaper reported.

China’s Ministry of Commerce organized a meeting attended by Science Applications International Corp., BYD, BMW, Volkswagen, Porsche, Mercedes-Benz, Stellantis NV and Renault SA. The main aim of the meeting was to put pressure on Europe and lobby against the tariffs the EU announced to shield its car industry from Chinese competition.

The Chinese auto market is the 3rd largest in the world after the US and Europe or billions of dollars are at stake. EU car exports to China were worth $28.5 billion in 2023, while the bloc bought about $14 billion of electric vehicles from China according to EU statistics agency figures. China accounts for 30% of German carmaker sales, which also accounts for employment and economic activity in various cities or many vested political interests.

The EU would imposed up to a 38.1% duty on imported Chinese EV. This is one of the reasons companies similar to BYD have announced plans to build plants in Europe and Mexico.

Linking to dividend paying stocks, tariffs and free trade are very important to companies to sell their goods beyond their borders. The issues are complex and every country believes in free trade as long as in balance the trade helps their businesses more than it hurts them. Over time every country’s policy lines shift depending on their economy and how it is doing, which is why tariffs are complex. Companies prefer relative stable legislation then they can allocate resources (build plants) in relationship to the tariffs and return on investments. If a company sees the competition bending the rules, one of the many ways to maintain its advantages is to see tariffs and free trade rules to fight the competition.

There are more questions than answers, till the next time – to raising questions.