Europe is divided over whether to back additional tariffs on Chinese-built electric vehicles, highlighting Brussels’ challenge in building support for its largest trade case yet as Beijing threatens wide-ranging retaliation.
That Europe is divided is manifest in Germany, whose carmakers made a third of their sales last year in China, and wants to stop the tariffs, according to a government source, while France has been among the firmest backers.
But a majority of countries are still weighing the pros and cons of the escalating trade spat, according to an informal poll by Reuters of EU governments.
The issue will be put to members in an advisory vote in the coming weeks, the first official test of support in a landmark case for the Commission. The EU initiated the probe without an industry complaint, the first such trade case of this kind.
The bloc is set to confirm on Thursday provisional duties of up to 37.6% on Chinese brands such as BYD, Geely and SAIC, as well as on China-made models of Tesla, BMW and other western automakers.
EU members will also vote in October if the Commission proposes multi-year tariffs at the end of its investigation. These would be blocked if a “qualified majority” if at least 15
countries representing 65% of the EU population votes against them.
France, Italy and Spain, with 40% of the EU population, have indicated they would back tariffs.
“Europe must defend itself if our companies are harmed and do not compete on equal terms,” Spain’s economy ministry said.
However, the Czech Republic, Greece, Ireland and Poland were still debating the issue, official and government sources said, while Belgium has a caretaker government and the Dutch only got a government this week.
NEGATIVE EFFECTS
Germany has stressed the need for a negotiated solution with Beijing. Its automakers have said tariffs are the wrong approach, with the negative effects outweighing any benefits.
Increasing the cost of EVs for consumers undermines the EU’s goal of being carbon-neutral by 2050, opponents say. Tesla has said it will hike prices.
Beijing’s retaliation could bring extra tariffs on EU exports of cognac, pork or luxury cars.
The Commission says duties are needed to counter cheap loans, land and raw materials and other subsidies and the goal is a level playing field, not shutting Chinese car makers out, as the United States’ planned 100% tariff is likely to do.
Tariffs could also give the EU leverage in negotiations with Beijing and push producers to make cars in the EU.
With Reuters inputs
