On Friday, July 12th, sources revealed that Germany will abstain from voting on the temporary tariffs imposed by EU member countries on electric cars made in China. Previously, the largest economy in the EU, Germany, had opposed increasing tariffs on China within the EU.
According to a report by Reuters on Friday, anonymous sources disclosed that EU member countries began voting on imposing temporary tariffs on electric cars made in China starting on Monday, July 8th. As the anti-subsidy investigation continues and negotiations between the European Commission and the Chinese authorities are ongoing, Germany has indicated it will abstain from voting.
Abstaining in the initial phase of voting signifies support for the European Commission to continue negotiations with Beijing on the EU’s largest trade case to date.
With one-third of Germany’s automotive manufacturers’ sales coming from China, Germany had previously expressed opposition to imposing tariffs, especially for German automakers investing in China. Despite facing pressure from cheaply dumped Chinese products, they fear retaliation from Chinese authorities in case of a trade conflict.
Amidst China’s increasing protectionism and stricter industrial policies, competition between China and Germany intensifies. Germany has become more aware of the threats posed by China, leading to a tougher stance on policies towards China.
In July last year, Germany released its first “China Strategy,” highlighting China’s global threats. Germany aims to reduce reliance on the Chinese market in key sectors, aligning with the EU’s call for a strategy to “de-risk” dealings with China.
At the end of June, German Vice Chancellor Robert Habeck made his first visit to China, where he stated that Beijing’s support for Russia in the Russia-Ukraine conflict is a significant reason behind the deteriorating economic relations between Berlin and Beijing. He emphasized that Beijing’s backing of Moscow would have economic consequences.
During the Trump administration, the United States already viewed Huawei as one of the biggest national security threats. Like its allied nations, the German government expresses concerns over China’s unchecked disruptive activities and espionage.
To safeguard national security, the German government announced on Thursday, July 11th, that by the end of 2029, it will completely eliminate the critical components and technology of Chinese companies like Huawei and ZTE from the 5G network.
Starting from July 4th, the European Commission imposed temporary tariffs ranging from 17.4% to 38.1% on imported electric cars from China.
As per procedures outlined in the EU’s basic anti-subsidy regulations, temporary tariffs can be implemented for up to four months. By November 3rd, a decision will be made on whether to impose permanent tariffs in the case of the anti-subsidy investigation into Chinese electric cars.
The initial vote was conducted in writing and in confidentiality without any binding force. During the interim stage, the European Commission holds full authority to impose tariffs, although it will seek the opinions of EU member countries and consider their stances.
Following the conclusion of the anti-subsidy investigation, a final vote will take place wherein the Commission can propose definitive tariffs, typically valid for five years.
If enough EU member countries out of the 27 oppose these measures, they can prevent their implementation, requiring a joint opposition from 15 EU member countries representing at least 65% of the EU population. In most cases, there is no majority to prevent the measures from being put into effect.