The European Union has a history of dealing with overcapacity issues, particularly in agriculture, where its common agricultural policy guaranteed high prices to dairy farmers, leading to excess production. However, the current focus of the EU is on the flood of electric vehicles and steel coming from China. This influx of products has the potential to displace industries and jobs within the EU. In recent meetings with Xi Jinping, Ursula von der Leyen expressed concerns about China’s “structural overcapacities” in manufacturing.
To address this issue, the EU is considering imposing “countervailing” tariffs to counterbalance the subsidies that have contributed to China’s industry growth. This action is being considered to protect European industries and prevent job losses within the union. The EU is taking steps to address the overcapacity issues in manufacturing to safeguard its economy and workforce.