The European Union will press ahead with hefty tariffs on China-made electric vehicles, the EU executive said yesterday, even after the bloc’s largest economy Germany rejected them, exposing a rift over its biggest trade row with Beijing in a decade.
The proposed duties on EVs built in China of up to 45 per cent would cost carmakers billions of extra dollars to bring cars into the bloc and are set to be imposed from next month for five years.
The Commission, which oversees the bloc’s trade policy, has said they would counter what it sees as unfair Chinese subsidies after a year-long anti-subsidy investigation, but it also said yesterday it would continue talks with Beijing.
A possible compromise could be to set minimum sales prices.
In a pivotal vote yesterday, 10 EU members backed tariffs and five voted against, with 12 abstentions, EU sources said.
It would have taken opposition from a qualified majority of 15 EU members, representing 65pc of the EU population, to block the proposal. Reuters reported on Wednesday that the measure was likely to pass with France, Italy and Poland in favour.
The region’s biggest economy and major car producer, Germany, voted against the proposal, sources said yesterday.
The EU executive said it had obtained “the necessary support” to adopt the tariffs, although it would continue talks with Beijing to find an alternative solution.
Noah Barkin, senior adviser at Rhodium Group, said it was a big victory for the Commission after acute pressure from Germany and China and strengthened Brussels’ hand in negotiations, although chances of a deal were slim.
“The risk is that Beijing feels a need to respond to the duties with retaliatory measures of its own, which torpedo the chances of a negotiated solution,” he said.
Shares in European carmakers Renault and Volkswagen rose on hopes the tariffs will help them compete with Chinese rivals on their home turf when global demand is falling.
Concerns among some domestic players have grown though that tariffs will spur Chinese companies to accelerate plans to build production capacity in the region.
The Chinese government has also discussed raising import duties on large-engined petrol vehicles, which would hit German producers hardest.
China’s Commerce Ministry expressed strong opposition to planned EU tariffs, calling them “unfair, non-compliant and unreasonable”, violating World Trade Organisation rules, although it made no mention of any counter measures. It has already launched a WTO challenge.
BMW chief executive Oliver Zipse described the vote as “a fatal signal for the European automotive industry”. Geely Holding expressed “deep disappointment” in the Commission’s decision.
Hungarian Prime Minister Viktor Orban said the EU was headed for an “economic cold war” with China.
However, France’s PFA car association said it was good EU members had backed duties, adding it was in favour of free trade, as long as it was fair.
Stellantis said the sector was under pressure from ambitious carbon reduction plans and “the Chinese global commercial offensive”.
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