EU has enough support to impose Chinese EV tariffs, sources say
France, Greece, Italy and Poland say they will vote in favour
3 October 2024
4 minute read
By: France, Greece, Italy and Poland will vote on Friday in favour of tariffs of up to 45% on imports of electric vehicles (EVs) made in China, sources said, enough to push through the European Union's highest profile trade measures, risking potential retaliation from Beijing, reported Reuters.
The European Commission, which is conducting an anti-subsidy investigation into EVs made in China, has put its proposal for final tariffs to the EU's 27 member states for a vote expected on Friday.
The support is a significant boost for Brussels as it pursues one of its largest trade cases ever. It remains unclear how the region's top economy and major car producer, Germany, will vote.
Under EU rules, the Commission can impose the tariffs for the next five years unless a qualified majority of 15 EU countries representing 65% of the EU's population votes against the plan.
France, Greece, Italy and Poland will vote in favour, officials and sources in those countries told Reuters. Together, they represent 39% of the EU population.
Commission President Ursula von der Leyen, who launched the investigation a year ago, said the EU needed to protect itself against a potential flood of cheap Chinese EV imports benefiting from state subsidies.
The Commission says registration of China-built EVs rose from 3.5% of the EU market in 2020 to 27.2% in the second quarter of 2024 and Chinese brands from 1.9% to 14.1%. China's spare production capacity of 3 million EVs per year, which needed to be exported, was twice the size of the EU market, it said on Tuesday.
The EU auto industry has generally opposed tariffs, notably German carmakers, which rely on China for almost a third of their sales.
In moves seen as a retaliation against Brussels' investigation into EVs, Beijing has this year launched its own probes into imports of EU brandy, dairy and pork products.
If tariffs are implemented, Chinese EV makers will have to decide whether to absorb them or raise their prices to cover the billions of dollars in new costs at European borders at a time when demand at home is falling. The prospect of duties has spurred some Chinese automakers to look to invest in factories in Europe, despite higher labour and manufacturing costs.
Chinese subsidies 'unbearable'
French President Emmanuel Macron said on Wednesday the level of Chinese subsidies was "unbearable".
"Broadly we have to protect the level playing field in all the different sectors of our industry," he said in Berlin.
The Czech industry and trade ministry, while declining to say how it would vote, said it took seriously the Commission's conclusions about "China's unfair practices" and noted that the US, Canada, Turkey and Brazil had already taken action.
The position of Spain, a previous backer of tariffs, was unclear after Prime Minister Pedro Sanchez said on a visit to China in September that the EU should reconsider its position.
German Chancellor Olaf Scholz said on Wednesday that talks with China must continue, but his country, which abstained from a vote on the matter in July, may do so again given differences of opinion in its three-party government.
"A trade war with China would do us more harm than good for a key European industry and a crucial sector in Germany," Finance Minister Christian Lindner said on Wednesday.
Volkswagen urged Germany to vote against the tariffs, arguing they would not improve competitiveness.
The Commission could push through the tariffs with the support of only four countries. However, the EU executive can submit an amended proposal if it wants to secure greater backing.
The EU executive has said it is willing to continue negotiating an alternative to tariffs with China and could re-examine a price undertaking - involving a minimum import price and typically a volume cap - having previously rejected those offered by Chinese companies.
One option under negotiation is minimum import prices calculated using criteria such as the range, battery performance and length of the electric vehicle, along with whether it is two- or four-wheel drive, a source familiar with the matter said.
An alternative is a commitment to investment in the EU, with quotas for a transitional period.
The tariffs range from 7.8% for Tesla to 35.3% for SAIC and other companies deemed not to have cooperated with the EU investigation. These tariffs are on top of the EU's standard 10% import duty for cars.
