Will the EU engage in a trade war with China; It will probably be seen the day after tomorrow, when the “27” will decide in a secret vote whether the Commission’s proposal to impose tariffs of up to 35.3% on imports of electric vehicles from Beijing will come into force from November, for five years.
A qualified majority of 15 Member States, representing 65% of the EU population, is required to ratify or annul the Commission’s proposal.
The European Commission argues that customs officials obligations are needed to protect European carmakers as Beijing distorts competition by subsidizing Chinese carmakers.
Several countries have also increased tariffs on Chinese electric cars. The US and Canada have opted for 100% tariffs. Turkey is applying an additional 40% tariff, while Brazil raised the rate to 18% in July and will increase it again to 35% in 2026. Washington has also increased tariffs on Chinese imports of solar panels to 50% from 25% and tripled duties on steel and aluminum to 25% from 7.5%.
Commission spokesman Olaf Gill said the Commission was “neither pessimistic nor optimistic about the vote”. He added, however, that the Commission remained “open to a negotiated solution, provided it is sufficient and effective to address the risk of harm to EU industry that we have identified in our investigation”.
Chinese intervention
Beijing is trying to prevent the tariffs from being imposed, which is why Chinese Commerce Minister Wang Wentao visited EU Commissioner Valdis Dobrovskis in Brussels last week, seeking to resolve the dispute. According to China’s Xinhua news agency, “progress has been made in the negotiations.” Both sides “clearly expressed their political will to resolve their differences through consultations,” the Chinese news agency said. According to reports from the Chinese Chamber of Commerce in the EU (CCCEU), which represents more than 1,000 Chinese companies in the EU, Wang said that trade relations between China and the EU are now at a crossroads: “One path leads to openness and cooperation, the other to protectionism and isolation.”
But Beijing’s efforts to persuade European capitals to vote against the tariffs have paid off. Last week, Spanish Prime Minister Pedro Sanchez and German Chancellor Olaf Scholz backed Beijing’s call for a negotiated solution to the dispute.
Berlin is on the fence because its car industry is particularly sensitive to trade relations with the Asian giant, where much of its production is imported. Major German carmakers are already starting to resent Brussels’ tariff proposal. Germany and Spain fear that if a compromise is not found, China could retaliate with tariffs on Chinese imports of German cars and Spanish pork – two important exports for Berlin and Madrid, respectively.
The Commission “agreed”.
The European Commission It has also announced other investigations, such as into suppliers of wind energy and medical products from China. Beijing has already responded by targeting two other sensitive sectors: pork and dairy products imported from the EU, accusing Brussels of subsidies and dumping.
Tobias Gerke, head of policy at the European Council on Foreign Relations (ECFR), however, believes that if the Commission’s proposal is voted down, it would be “terribly defamatory” for Brussels. “I think the Commission is quite determined in its approach to China: you could say it is quite bellicose or you could say it is woke.”
Several European diplomats, however, stressed that member states’ support for the Commission was largely “passive”. Member states in favour of a negotiated solution were not closely involved in the Commission’s decision and did not exert strong pressure on Brussels to change its position.
After all, given that some models sell for as little as $10,000 in China, even if tariffs are eventually imposed, they are unlikely to make Chinese EVs uncompetitive.
China: EU tariffs on electric vehicles are unfair, we will take action
Chinese vehicles manufactured in the EU
For Tobias Gehrke, Europe’s main concern in the future should not be the fear of Chinese retaliation, but rather how Beijing will try to avoid tariffs by investing in the production of electric vehicles in Europe.
“We don’t need another trade war,” Spanish Prime Minister Pedro Sanchez said during a visit to China last week. “If you ask me, we should reconsider our position.” A Chinese Foreign Ministry spokesman called Sanchez’s remarks “reasonable and objective” and stressed that China is committed to dialogue for stable and healthy trade relations with the EU.