The European Commission announced on Friday (October 4) that it has received sufficient support from EU members to impose tariffs of up to 45% on imported electric cars from China. This move marks an important step taken before the final conclusion of the Commission’s anti-subsidy investigation.
The Commission, responsible for overseeing EU trade policy, has proposed the final tariff plan for the next five years after a year-long anti-subsidy investigation to address unfair subsidies from the Chinese government. According to EU rules, unless 15 EU countries representing 65% of the EU population vote against the plan, the Commission can impose tariffs over the next five years.
According to information provided by EU sources to Reuters, in the vote on Friday, 10 EU members supported the imposition of tariffs, 5 opposed, and 12 abstained.
Reuters reported on Wednesday that the proposal is likely to be approved as France, Greece, Italy, and Poland are expected to support it. These four countries, representing 39% of the EU population, voting in favor means it has reached the threshold for approval.
The European Commission stated that it has received the “necessary support” to adopt the tariff proposal but will still negotiate with Beijing to seek alternative solutions.
The Commission’s implementing regulation must be published in the official gazette by October 30, 2024, which will include the final investigation results.
Sources revealed to Reuters that Germany, the EU’s largest economy and a major car-producing country, voted against the proposal in Friday’s vote. German car manufacturers nearly have one-third of their total sales in China. Volkswagen stated that imposing tariffs is a “wrong approach”.
Stellantis Group expressed support for free and fair competition, noting the industry is facing ambitious carbon reduction plans and pressures from the “China global business offensive”.
The European Commission highlighted that China has an annual excess capacity of 3 million electric cars that need to be exported, double the EU market. With the US and Canada imposing tariffs at 100%, it is evident that these electric cars will be exported to Europe.
Over the past five years, the EU’s stance towards Beijing has been increasingly assertive, viewing China as a competitor and systemic rival. Hungarian Prime Minister Viktor Orban stated on Friday that the EU is moving towards an “economic cold war” with Beijing.
The Chinese Ministry of Foreign Affairs did not immediately respond to Reuters’ request for comment. Beijing previously retaliated by initiating investigations into EU imports of brandy, dairy products, and pork this year.
The European Commission stated its willingness to continue negotiating with Beijing on alternative tariff solutions, potentially reconsidering price commitments – including minimum import prices and usual quantity limits. However, previous proposals from Chinese companies were rejected.
The current tariff rates range from 7.8% for Tesla to 35.3% for SAIC, and this applies to other companies deemed non-compliant with the EU investigation. These tariffs are on top of the EU’s standard 10% import tax for cars.