EU Pushes Forward with Chinese EV Tariffs Amid Divided Vote

Despite Germany’s opposition, the EU will implement tariffs of up to 45% on Chinese-made electric vehicles starting next month, marking the bloc’s largest trade dispute with China in a decade.

Trade Clash with China

The European Commission, responsible for trade policy, stated it has the necessary backing for the tariffs, even as Germany, the region’s largest economy, opposed the measure. France, Italy, and Poland supported the tariffs, while 12 EU members abstained from the vote. Beijing has warned of potential retaliation if the tariffs proceed.

Aiming to Counter Chinese Subsidies

The proposed tariffs aim to counter what the EU views as unfair subsidies from China after a year-long investigation. Talks with Beijing will continue, with a potential compromise of setting minimum sales prices for Chinese EVs in Europe.

Retaliation and Risks

China has threatened to retaliate against the tariffs, which it calls unfair and a violation of WTO rules. Some EU members fear this could lead to a trade war. Beijing has already launched investigations into EU imports such as brandy, dairy, and pork. A prolonged dispute could harm both European and Chinese industries.

Mixed Reactions

French automakers welcomed the move, citing the need for fair trade practices. However, German industry leaders, like BMW’s CEO, warned that the tariffs send a “fatal signal” to the European auto sector. Hungary’s Prime Minister Viktor Orban also criticized the decision, predicting an economic cold war with China.

EU’s Changing Stance on China

Over the past five years, the EU has adopted a tougher approach to China, viewing it as both a competitor and systemic rival. With Chinese EV production exceeding demand, Europe is seen as the primary market for these exports. The tariffs, ranging from 7.8% to 35.3%, aim to protect European manufacturers from this influx. However, experts are skeptical about the long-term effectiveness of these measures in protecting the industry.