China urges Turkey to correct measures over Chinese EVs

China has urged Turkey to reconsider its recent trade measures targeting Chinese electric vehicles (EVs), which include 40% additional tariff on vehicle imports from China, effective July 7, 2024. The Turkish government introduced the measure to protect its domestic automotive industry from what it perceives as unfair competition from heavily subsidized Chinese EVs. The move aligns with a broader global trend of countries imposing trade barriers on Chinese EVs, including the European Union, which announced multi-band tariffs ranging from 17.4% to 38.1% on Chinese-made EVs.

The Turkish Trade Ministry justified the tariff as a necessary step to protect the declining share of domestic vehicle production and to address the country’s chronic current account deficit. The additional tariff is applied as either a 40% surcharge or a minimum of $7,000 per vehicle, whichever is higher. The ministry emphasized that the decision supports Turkey’s economic strategy to encourage domestic investment and production.

Chinese automakers operating in Turkey, including Chery and MG, have responded to the new regulation. Si Fenghuo, president of Chery Turkey, stated that the company respects the government’s decision and is exploring establishing local production facilities in Turkey. This approach could help mitigate the impact of the tariffs by enabling local manufacturing and reducing reliance on imported vehicles.

The Turkish automotive industry has expressed concerns about the potential fallout from the new tariffs. Hüsamettin Yalçın, general manager of the automotive data company Cardata, noted that the regulation could significantly affect inventory management and pricing strategies for importing companies. He also predicted a surge in sales of existing Chinese vehicle stocks before the tariff’s implementation, followed by a sharp decline in sales after July 8.

China’s response to the Turkish measures has been relatively muted compared to its reactions to similar actions by the EU and the United States. While Beijing has taken Turkey to the World Trade Organization (WTO) over the issue, it has not imposed retaliatory measures or threatened economic coercion. This approach reflects a broader pattern in which China tolerates trade restrictions from developing countries when it perceives potential political gains, while responding more aggressively to measures from countries it views as politically aligned with its rivals.

The outcome of this trade dispute will likely depend on how effectively Turkey can balance its domestic industrial interests with its broader economic and political relationships. For now, the situation highlights the growing global scrutiny of China’s export practices and the complex interplay between trade policy and geopolitical strategy.