Global EV competition intensifies as China challenges EU tariffs

The big picture: The U.S. and the EU have accused China of unfairly subsidizing its EV market.

• The Biden administration is imposing 100% tariffs on Chinese EVs to the U.S.
• China, for its part, has already filed a complaint with the WTO alleging that EV credits in the U.S. Inflation Reduction Act violate trade rules.

The latest: China filed an appeal with the World Trade Organization Friday, saying the EU tariffs violate WTO rules and hurt the global fight against climate change, state media reported.

• The EU recently announced plans to impose a 37.6% levy on Chinese EVs, which are flooding into the market and posing a competitive threat to European automakers.

The EU signaled Friday that it will move forward with its tariffs, which would go into effect in November.

• "The Commission is confident of the WTO-compatibility of its investigation and provisional measures," a Commission spokesperson told Reuters.

Reality check: Tariffs have little chance of masking the fact that Chinese automakers have a tremendous cost advantage over the rest of the global auto industry on EVs.

• "Think of the new European tariffs on Chinese cars like a glancing blow thrown by a fading heavyweight fighter, one that will not stop China's advance," Dunne Insights analyst and China auto expert Michael Dunne wrote in June.

• "The reality is that the Chinese are already woven into the fabric of Europe's car markets—and often in partnership with the Europeans themselves."

Meanwhile, Friday's move could have broader ripples.

What we're watching: The tit-for-tat is part of what "some analysts fear could develop into an economically harmful trade war with the EU," with China already investigating exports of French cognac and European pork, the AP reported.