EU Pushes Chinese EV Tariffs Through After Divided Vote

The European Union (EU) has advanced plans to impose higher tariffs on electric vehicles (EVs) imported from China, a decision that has sparked significant internal disagreements among member states and drawn strong reactions from Beijing.

The proposal, initially introduced by the European Commission in July 2024, seeks to impose additional duties of up to 35% on Chinese-made EVs, supplementing the existing 10% tariff. This measure is driven by concerns that Chinese manufacturers benefit from substantial state subsidies, which the EU argues provide an unfair competitive advantage over European producers.

In a vote held on Oct. 4, 2024, 10 countries, including Italy, France, and Poland, supported the proposal, while five countries, including Germany and Sweden, opposed it. Twelve member states abstained. The decision will be finalized and take effect once it is published in the EU’s Official Journal by Oct. 30, 2024.

“The proposal for definitive countervailing duties on imports of electric vehicles from China has received the necessary support from EU member states,” stated The European Commission.  However, the Commission also emphasized its commitment to diplomatic efforts with China, assuring that both sides “will continue working hard to explore alternative solutions that fully comply with World Trade Organization (WTO) rules.”

The Commission’s investigation, which concluded that Chinese EV manufacturers were benefiting from unfair subsidies, has ignited debate among member states. France, Italy, and Poland argue that these tariffs are essential to level the playing field for European carmakers who struggle to compete with cheaper Chinese EVs. In contrast, Germany, with its strong automotive industry heavily invested in the Chinese market, has expressed concerns about the long-term consequences of escalating trade tensions.

“The Commission must not ignite a trade war. Instead, it should seek a negotiated solution with Beijing,” said Christian Lindner, Finance Minister, Germany.

China reacted swiftly and sharply to the EU’s decision. The Chinese  Ministry of Commerce called for the immediate postponement of the tariffs and urged dialogue to prevent an escalation of trade disputes. In a related move, Beijing has already launched investigations into European imports, signaling potential retaliatory measures.

The Chinese Chamber of Commerce in the EU echoed the government’s sentiment, expressing “deep dissatisfaction with the adoption of protectionist trade measures” and urging European leaders to act cautiously. “We strongly encourage the EU to delay the implementation of these tariffs and remain committed to dialogue,” the chamber said in a statement.

The tariffs will target some of China’s largest automakers, with companies like BYD, Geely, and SAIC facing significant duty increases. BYD will face a 17% tariff, Geely 19.3%, and SAIC 36.3%. Manufacturers that cooperated with the EU’s investigation will see an average additional tariff of 21.3%, while non-cooperative companies may face duties as high as 46%.

Volkswagen, Europe’s largest carmaker, criticized the tariffs, calling them a “poor approach” to maintaining the competitiveness of Europe’s EV industry. The company urged the EU and China to continue negotiations. “We encourage the European Commission and the Chinese government to pursue constructive talks with the aim of reaching a political solution,” Volkswagen stated.