To stop a flood of inexpensive imports, the European Union is looking into Chinese subsidies for electric vehicles. This is a step up in the probe that might lead to harsh punitive actions that would hurt the manufacturers in the EU.

“Potential tariffs emerging from the probe could have a significantly greater impact than any prior steps to counter subsidies for Chinese imports because of the market’s size and rapid growth. Cheap Chinese automobiles are flooding the global market, but the group will fight back, according to European Commission President Ursula von der Leyen.

In her yearly address to the European Parliament, the EU’s top executive claimed that “huge government subsidies keep their price artificially low.” Our market is distorted by it.

For months, there has been a high level of tension between China and the EU. As the industrial core of the bloc runs the risk of losing market share to Chinese firms with quicker growth rates, the transition to cleaner technology is a particular source of concern.

After more than a year of escalating government subsidies in the US, China, the UK, and Europe, the investigation is the first tangible step to terminate funding for green technologies. Depending on the outcomes, this can encourage trading partners to take protective measures against one another.

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