Navigating EU-China Electric Vehicles Trade Disputes: A Game Theory Analysis

This paper investigates potential trade disputes stemming from environmental subsidies and competition in green technologies between China and the EU. Specifically, it analyzes the EU's imposition of tariffs on Chinese electric vehicles (EVs), examining the responses and strategies of the EU, specifically from Germany, and China, along with their respective EV manufacturers. In this regard, game theory is selected as a theoretical framework to explore the short and long-term impacts of these disputes on EU-China EV trade dynamics, predicting outcomes and strategic responses. The analysis finds that sustained bilateral cooperation and reciprocal market engagement between German and Chinese EV manufacturers constitute the most viable strategy for long-term mutual benefit, whereas escalating tariff measures tend to generate suboptimal, mutually detrimental outcomes.