The EU yesterday voted to impose tariffs as high as 45 percent on electric vehicles (EVs) from China in a move set to increase trade tensions with Beijing.
The European Commission, the bloc’s executive arm, can now proceed with implementing the duties, which would last for five years. Ten member states voted in favor of the measure, while Germany and four others voted against, and 12, including Spain, abstained, sources familiar with the results said.
The decision by the EU comes after an investigation found that China unfairly subsidized its industry. Beijing denies that claim and has threatened its own tariffs on the European dairy, brandy, pork and automobile sectors.
Photo: AFP
The bloc is actively trying to reduce its dependencies on China, with former European Central Bank president Mario Draghi warning last month that “China’s state-sponsored competition” was a threat to the EU that could leave it vulnerable to coercion. The EU, which did 739 billion euros (US$815 billion) in trade with China last year, was split on whether to move forward with the duties.
The EU and China would continue negotiations to find an alternative to the tariffs. The two sides are exploring whether an agreement can be reached on a mechanism to control prices and volumes of exports in place of the duties.
“The EU and China continue to work hard to explore an alternative solution that would have to be fully WTO-compatible, adequate in addressing the injurious subsidization established by the commission’s investigation, monitorable and enforceable,” the commission said in a press release announcing the decision.
The new tariff rates would be as high as 35 percent for EV manufacturers exporting from China. The duties would be on top of the existing 10 percent rate.
Chinese EV makers would have to decide whether to absorb the tariffs or raise prices, at a time when slowing demand at home is squeezing their profit margins. The prospect of duties has prompted some Chinese automakers to consider investing in factories in Europe, which might help them dodge tariffs.
A statement from Geely Holding Group Co (吉利控股集團), which controls Sweden’s Volvo and UK’s Lotus Cars, criticized the decision, saying it was “not constructive and may potentially hinder EU-China economic and trade relations, ultimately harming European companies and consumer interests.”
The additional tariffs already have slowed Chinese automakers’ momentum in Europe, with their sales plunging 48 percent in August to an 18-month low. The region is a desirable destination for the nation’s manufacturers because EVs sell in relatively high numbers and at much more robust prices than other export markets.
The share of EVs sold in the EU that were made in China climbed from about 3 percent to more than 20 percent in the past three years. Chinese brands accounted for about 8 percent of that market share, as international companies that export from China, including Tesla Inc, taking up the rest.
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