On October 4th, the majority of EU member states supported the European Commission’s (EC) proposal to increase tariffs on electric vehicles imported from China for the next five years. According to AFP, 10 countries voted in favor, 5 opposed, and 12 abstained. The EC is expected to make its legally binding decision by October 30, with the new tariffs taking effect the following day.

The vote was originally scheduled for September 25 but was postponed to allow further negotiations between Beijing and Brussels, aiming to find a compromise. The EC hoped China would agree to set a minimum price for its electric vehicles to avoid the need for these additional duties. The proposed tariffs range from 17.4% to 35.3%, on top of the existing 10% import tariff, targeting major Chinese manufacturers like BYD, Geely, and SAIC. Automakers like Volkswagen and BMW, which also produce electric vehicles in China, could face a 20.7% tariff, while Tesla may receive a specially calculated rate of 7.8%.

The EC began investigating China's subsidies for electric vehicle production last October. In July, as part of this inquiry, the EC imposed temporary four-month tariffs on Chinese electric vehicles. Beijing criticized this move, claiming it harms global climate cooperation, and filed a complaint with the World Trade Organization (WTO) in August. China also launched its own investigation into European pork and dairy exports in retaliation. Meanwhile, the EC has sought WTO consultations over China’s actions.

The EU's stance aligns with the U.S., whose relations with China have been strained since the Trump administration and continue under President Biden. In a 2022 summit, Biden described U.S.-China relations as "rivalry".

The EU, according to European Commission President Ursula von der Leyen, views China as a "dialogue partner, economic competitor, and systemic rival." In 2023, the EC introduced its first economic security strategy, including restrictions on exporting critical technologies. China condemned these measures as protectionism.

Germany, one of the countries that opposed the tariffs, voiced concerns. German automakers like Mercedes, BMW, and Volkswagen, which heavily depend on the Chinese market, fear Beijing’s retaliation. Hungary’s Prime Minister Viktor Orban also criticized the move, warning of a potential “economic cold war” with China. Conversely, France, Italy, and Poland supported the tariffs.

Experts predict that China will retaliate, likely targeting European exports with duties on products such as brandy, pork, and dairy in the near future. While Chinese electric vehicle exports to the EU are currently modest, China has invested heavily in the industry, aiming to make it a key export to developed markets. Coordinated sanctions from the EU and the U.S. could disrupt these plans, and China is expected to respond accordingly. Germany, in particular, may face consequences, as China could target its exports of traditional combustion-engine vehicles.

Regions
Countries
Tags