China being the world's factory is starting to become a problem for the rest. Especially now that what they produce is essential, and with superior technology to ours; the times when the country did reverse engineering are long gone. Trump complained, and now the European Commission also does, which has set out to reduce a growing trade deficit between the Union and the Asian giant.
The Commission values that the global manufacturing of electronic components, semiconductors, and components for electric vehicles makes the Old Continent too dependent in key sectors. And, in a decade of geopolitical withdrawal, each one must look after keeping strategic assets at home. The data for some products are devastating: 98% of solar panels and 88% of lithium batteries are manufactured in China.
Technological dependence is a real risk and the industrial acceleration law points in the right direction. But we must be careful of unintended consequences. Europe has long needed to get its act together. And, to do it well, they should be lithium. As it could not be otherwise, China criticizes any protectionist measure and warns that it will respond. In turn, the EU accuses China of dumping (selling below cost) thanks to government subsidies. Finding a balance will not be easy: the aim is to reduce imports without harming the exports of some member countries too much.
Protection is not free. Chain reactions are difficult to predict and even more difficult to reverse. An example of this are the tariffs that the EU added to the imports of electric vehicles manufactured by Chinese companies, which gain market share, year after year, due to their low prices. Well, the companies absorbed the costs of the tariffs and promoted the sales of plug-in hybrid models, which are exempt from these tariffs. The final result? Growth in Chinese car sales. Technological dependence is a real risk and the industrial acceleration law points in the right direction. But we must watch out for unintended consequences. Europe has long needed to get its act together. And, to do it well, let them be lithium.
