Europe has a long history of dealing with overcapacity issues, such as butter mountains and milk lakes caused by its common agricultural policy. This policy guaranteed high prices to dairy farmers, leading to excess production. However, the current worry for Europe is focused on the flood of electric vehicles and steel coming from China. The 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%. To address this issue, 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. Ursula von der Leyen, President of the European Commission, expressed concerns about China’s “structural overcapacities” in manufacturing during a recent meeting in Paris.
The EU is taking steps to address the overcapacity issues in manufacturing to safeguard its economy and workforce. The European Union has previously dealt with overcapacity in agriculture but now it is focusing on protecting its industries from being displaced by Chinese imports. The EU wants to ensure that its industries remain competitive and continue to provide jobs for its citizens.