The European Union voted on Friday to pave the way for tariffs of up to 35.3% on electric vehicles imported from China, a move that might set the stage for a protracted trade war with the Asian giant.
The vote comes after a year-long anti-subsidy investigation by the European Commission, which proposed the tariffs to counter what it sees as unfair Chinese subsidies.
Countries including France, Italy, Greece, and Poland had indicated they would support the tariffs. However, Germany, along with Hungary, Malta, Slovakia and Slovenia, voted against the proposal, according to German public broadcaster Deutschlandfunk.
EU-China negotiations to continue for now
The European Commission, the bloc’s executive arm, will now decide whether the import duties come into force at the beginning of November.
The Commission has said the tariffs could be lifted if China addresses the EU’s concerns. It said in a statement on Friday that it would continue negotiations “to explore an alternative solution that would have to be fully WTO-compatible, adequate in addressing the injurious subsidization established by the Commission’s investigation, monitorable and enforceable.”
Beijing also expressed an interest in continuing negotiations, saying that tariffs would harm business relations.
“China hopes that the EU will recognize that imposing tariffs will not solve any problems, but will only shake the confidence of Chinese companies and deter them from investing in and cooperating with the EU,” the Ministry of Commerce said in a statement.
“China urges the EU to turn its political willingness into action and return to the right track of resolving trade frictions through consultations,” it added. Talks are set to resume on Monday.
Germany, Spain oppose tariffs
Germany, the bloc’s largest economy and a major car producer, has voiced strong objections, fearing the tariffs could harm its automakers, which rely heavily on the Chinese market.
German carmaker Volkswagen criticized the tariffs, calling them “the wrong approach.”
The German Automotive Industry Association (VDA) called the vote a “further step away from global cooperation.”
VDA President Hildegard Müller urged both sides to avoid an escalation, and to “ideally stop the tariffs, to avoid risking a trade war.”
The tariffs range from 7.8% for foreign companies like Tesla, which manufacture vehicles in China, to as high as 35.3% for Chinese companies that reportedly did not cooperate during the investigation.
These tariffs are in addition to the EU’s standard 10% import duty on cars.
Meanwhile, according to a Reuters exclusive report Spanish Economy Minister Carlos Cuerpo wrote to European Commission Vice President Valdis Dombrovskis asking for negotiations to be kept open beyond the vote, instead of imposing tariffs.
Slovakia and Hungary are also against the proposed tariffs.
‘Tariffs to protect European carmakers from unfair competition’
The European Commission, which oversees trade policy for the bloc, argues that the tariffs are necessary to protect European carmakers from unfair competition, as Chinese automakers benefit from substantial state subsidies.
Beijing opposed the tariffs calling them “protectionist” and threatening retaliatory measures.
The United States and Canada have announced 100% tariffs on Chinese EVs, leaving the EU a lucrative market for Chinese EVs.
China has already launched investigations into European imports of brandy, dairy, and pork products, signaling reactive measures.
The European Commission has indicated a willingness to continue negotiations with China, including considering a minimum import price for electric vehicles.
ss/sms (AFP, Reuters)
