The European Union voted on Friday to impose punitive tariffs on Chinese electric vehicles, which could reach as high as 45 percent. This decision paves the way for the European Commission to implement the new rules, but it will likely escalate the trade dispute between Brussels and Beijing. Ten countries voted in favor of the tariffs, while four – including Germany and Hungary – opposed them, and twelve member states abstained.
The EU’s decision follows an investigation launched by the European Commission last October, which suspects that Beijing provided illegal state subsidies to its automotive industry. China has, of course, denied this and has threatened retaliatory measures, targeting products such as dairy, brandy, pork, and the automotive industry. The EU is trying to reduce its dependence on China, and Mario Draghi, the former president of the European Central Bank (ECB), has also written about how the dumping of state-subsidized Chinese products poses a threat to Europe’s industry and could make the bloc vulnerable. Last year, trade between the EU and China amounted to 739 billion euros, leaving member states divided on the issue of imposing tariffs.
The EU and China are continuing discussions on alternatives to tariffs, which could involve imposing import duties based on the vehicles’ key characteristics (size, performance, drivetrain, etc.), with a minimum rate set in every case. Chinese electric vehicle manufacturers must now decide whether they can absorb the increased costs. Several Chinese manufacturers have opted to build factories in Europe, hoping to avoid the tariffs. BYD is planning factories in Szeged and Turkey, while Chery is targeting Spain and Turkey for production.
Translated and edited by Alex Kada
