EU Split on Chinese EV Tariffs

The European Union member states are split on the provisional EU tariffs on imports of Chinese electric vehicles, as many governments seek to avoid a trade war with China and protect the profits of their biggest auto manufacturers.  

In a non-binding vote on Tuesday, a dozen EU member states voted in favor of the tariffs – which took effect in a provisional form earlier this month – but four voted against the levies and 11 EU governments abstained, a source familiar with the vote told Reuters.

While the vote wasn’t binding, the European Commission is expected to consider the EU government’s position on the tariffs when it decides whether to pursue definitive duties for a period of five years.

The current duties, in effect from July 5, are provisional and for a maximum period of four months. 

The EU launched in October 2023 anti-subsidy investigations into EU imports of EVs from China to determine whether the value chains in China benefit from illegal subsidies.

The tariffs led to a reaction in China, which is proceeding with anti-dumping investigations of EU imports, targeting brandy and pork imports from the bloc, likely aimed at Spain, France, the Netherlands, and Denmark.

With these tit-for-tat probes, China appears to be trying to force Spain’s and France’s hand in the EV tariff issue and have them persuade other EU members to drop the tariffs, analysts say.

VDA, Germany’s automakers’ association, has said that the “stated goal of ensuring fair competition conditions and protecting the domestic industry from unfair practices will not be achieved” by the anti-subsidy tariffs.

“The European anti-subsidy tariffs would not only affect Chinese manufacturers but also European companies and their joint ventures in particular,” VDA added.

The European Commission has signaled to the top German carmakers Volkswagen and BMW that the EU imports of their China-made EVs could be classed as such from companies cooperating with the anti-subsidy investigation, sources familiar with the matter told Reuters this week. As cooperating companies, Volkswagen and BMW would be subject to a lower 20.8% tariff, down from the highest tariff of 37.6% currently, as they weren’t included in the EU’s sample analysis.

By Tsvetana Paraskova for Oilprice.com

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