The European Union is set to vote on Friday (October 4th) on whether to impose a 45% tariff on electric cars made in China. Sources say that France, Greece, Italy, and Poland are in support of this decision, which should provide enough votes for the proposal to pass.
According to EU regulations, unless 15 member countries representing a total of 65% of the population oppose the proposal, it is likely to pass. Sources informed Reuters that France, Greece, Italy, and Poland are expected to vote in favor, with these four countries already representing 39% of the EU population, meeting the threshold for approval. The European Commission is expected to be able to levy tariffs on Chinese electric cars in the next five years.
EU Commission President Ursula von der Leyen initiated an investigation into Chinese electric cars a year ago. She stated that the EU needs to protect itself from a potential influx of low-cost Chinese electric cars, which benefit from substantial subsidies from the Chinese Communist Party.
The EU Commission reported that the registration of Chinese-made electric cars in the EU market has risen rapidly from 3.5% in 2020 to 27.2% in the second quarter of 2024, with the market share of Chinese brands alone increasing from 1.9% to 14.1%.
The EU Commission noted that China has an excess capacity of 3 million electric cars for export every year, doubling the size of the EU electric car market.
If tariffs are imposed, Chinese electric car manufacturers will need to decide whether to absorb the costs or raise prices. Despite higher labor and manufacturing costs, the prospect of tariffs has prompted some Chinese automakers to seek investment in factories in Europe.
French President Macron criticized the level of subsidies from the Chinese Communist Party as “unbearable.” He stated in Berlin, “Broadly speaking, we must ensure that various sectors have a fair competitive environment.”
The Czech Republic declined to reveal its voting stance but stated that it will take the Commission’s conclusions on “China’s unfair practices” seriously, noting that the US, Canada, Turkey, and Brazil have taken action.
Spain initially supported imposing tariffs, but Prime Minister Sanchez suggested during his September visit to China that the EU should reconsider tariffs.
Germany abstained from the vote in July and may do so again.
The EU expressed willingness to continue negotiations with Beijing on alternative tariff arrangements. One source indicated that a proposal under discussion involves calculating the minimum import price for each vehicle model based on criteria such as range, battery performance, and whether it is two-wheel or four-wheel drive.