Brussels (The Brussels Morning Newspaper) – EU leaders have shown the green light to extra tariffs on electric vehicles from China despite resistance from five countries including Germany, where car manufacturers criticised the decision as a potential “fatal” blow to the auto industry.
The European Commission which provisionally agreed on the step in June after an inquiry discovered that Beijing’s state aid to auto manufacturers was unjust now has free rein to inflict steep tariffs for five years from the end of this month. The tariffs of up to 35.3%, coming on top of existing duties of 10%, were backed by 10 member states including France, Italy and Poland, several European diplomats told the Media.
How do German automakers respond to these tariffs?
Five nations including Germany and Hungary, which has meaningful investment promises from China, voted against it, while 12 refrained including Spain and Sweden. BMW and Volkswagen blamed the EU decision. BMW expressed it was a “fatal signal” for the European car industry, while VW expressed it was the “wrong approach”.
Germany’s auto industry association, the VDA, also commented, stating the country’s vote against tariffs was the “right signal” for the industry. The carmakers’ opposition led to some fuss that instead of falling behind EU policy, they were siding with China, which criticised the vote as “protectionist”.
“We strongly urge the EU to … delay the implementation of these tariffs, and prioritise resolving disputes and trade tensions through consultations and dialogue,” the China Chamber of Commerce to the EU stated in a statement.
Although the tariffs did not succeed with support from a majority of states, the resistance was not enough to block them – which would have needed the objection of at least 15 nations representing 65% of the bloc’s people. That leaves the choice of moving ahead in the hands of the commission, which “can be expected to settle in line with its proposal,” an EU diplomat expressed. The extra duties also spread, at various rates, to vehicles made in China by foreign parties such as Tesla, which faces a tariff of 7.8%.
Will these tariffs benefit or harm EU manufacturers?
Brussels expresses the measures aim to protect European carmakers in a crucial industry that provides jobs to about 14 million individuals across the EU but does not profit from hefty state subsidies like in China.
The EU duties have pushed France and Germany against each other, with Paris claiming they are necessary to level the playing field for EU carmakers against Chinese counterparts. The levies due to come into force from the beginning of November and hold for at least five years, vary from 7.8% extra duties on Tesla cars manufactured in China to 35.3% for cars produced by the conglomerate SAIC including the British brand MG.
