As tensions rise over potential trade conflicts, EU member states face a critical decision regarding the imposition of additional import tariffs on electric vehicles (EVs) manufactured in China. This decision comes amid threats of retaliation from Beijing.
The political landscape within the European Union (EU) is charged as negotiations unfold in Brussels over a proposal to impose supplementary tariffs on Chinese electric vehicle imports. The upcoming vote on Friday morning will see the 27 member countries split on the issue: Hungary is vocally opposed, while France and Italy stand firm in support. Meanwhile, Spain is weighing its options, and Germany grapples with the impact of a failed campaign against the tariffs.
This decisive vote follows an extensive investigation initiated by European Commission President Ursula von der Leyen in September last year. The inquiry was triggered by concerns that the market is being flooded with artificially low-priced Chinese EVs, underpinned by significant state subsidies, which distort the competitive environment in the EU.
In von der Leyen’s own words, “Global markets are now flooded with cheaper Chinese electric cars. Their prices are kept artificially low by huge state subsidies, distorting our market.” This statement laid the groundwork for a thorough investigation into the practices of major Chinese manufacturers, including BYD, Geely, and SAIC, who were each required to respond to detailed questionnaires about their operations and government relationships.
The findings were alarming for European stakeholders: it was confirmed that Beijing had provided substantial financial support to its domestic EV sector, impacting the entire supply chain—from raw material extraction to finished product shipping. This financial imbalance, involving mechanisms such as preferential loans, tax breaks, and direct grants, poses a serious threat to European manufacturers, risking their exit from this lucrative market sector and jeopardizing over 12 million jobs within the EU.
In response, Brussels has proposed a series of new tariffs designed to level the playing field. These tariffs would be added on top of the existing 10% duty and would vary depending on the company’s compliance with the investigation. Proposed rates include 7.8% for Tesla, 17% for BYD, 18.8% for Geely, and a substantial 35.3% for SAIC.
The vote will require a qualified majority, meaning at least 15 countries representing a minimum of 65% of the EU population must support the proposal for it to pass. Conversely, if rejected, it could lead to an appeal process and further negotiation. Additionally, a potential abstention from certain countries could stall the decision, allowing the Commission to unilaterally decide on tariff implementation under its trade authority.
Importantly, the deadline for a final decision is set for October 30, coinciding with the conclusion of the anti-subsidy investigation.
Ursula von der Leyen’s Leadership at Stake
With the stakes heightened, this vote represents a pivotal moment not just for EU-China relations but also for President von der Leyen’s broader China strategy. Von der Leyen has taken a firmer stance towards China, characterizing it as increasingly repressive domestically and assertive internationally. She emphasizes that unfair trade practices, particularly involving industrial subsidies, threaten the integrity of market competition.
Janka Oertel from the European Council on Foreign Relations describes this vote as a “litmus test for whether the EU’s proposed solutions to strengthen its negotiating position with China can withstand internal pressures from member states.” A successful outcome would bolster von der Leyen’s mandate, encouraging her to pursue an assertive strategy in her next term. Conversely, a rejection of the tariffs could signal a significant victory for China’s diplomatic maneuvering and its ability to exploit divisions within the EU.
Germany’s Role and Response
As this political drama unfolds, China has publicly denounced the investigation as protectionist. Beijing has threatened retaliation against European sectors such as dairy, brandy, and pork while simultaneously exploring potential compromises to avoid tariffs, including the possibility of establishing minimum pricing for its EVs.
China’s lobbying efforts have intensified, particularly towards European industrial powerhouses like Germany, traditionally a proponent of tempered relations with Beijing. Despite a coalition government that includes leadership from the Greens, who advocate a more robust stance against China’s policies, pressures from both automotive producers and a wary public have led to a retreat from that position.
Amidst this backdrop, France and Italy have remained supportive of the Commission’s proposal, while Poland and the Netherlands are advocating for a tougher approach to China. Collectively, these attitudes reflect a broader shift in sentiment across the EU, shaped by the lessons learned from geopolitical conflicts, like the war in Ukraine.
Noah Barkin from the German Marshall Fund highlights that Germany’s influence over EU-China policy appears to be waning as member states react to the shifting dynamics of international relations. The stakes of the upcoming vote are immense, and the results will set the tone for the future of European trade policy.
Photo credit & article inspired by: Euronews
