EU backs tariffs on Chinese EVs despite concerns about Chinese retaliation

European Union countries voted Friday to adopt tariffs of up to 45% on electric vehicles, or EVs, imported from China.

Ten countries, including France and Italy, supported the imposition of tariffs, while five countries, including Germany, voted against the proposal. A total of 12 countries abstained.

Analysts say the outcome affirms European Commission President Ursula von der Leyen’s China policy, which advocates the need for the EU to reduce its dependency on China and strengthen its ability to counter what the bloc sees as China’s unfair trade practices.

Friday’s outcome shows that “the EU can meaningfully start to act on the problems coming out of China,” said Jacob Gunter, the lead economy analyst at the Mercator Institute for China Studies in Germany.

Some European politicians say the EU’s decision to impose tariffs against Chinese EVs is an important step in the bloc’s efforts to safeguard its industries.

“We must ensure unfair competition from China doesn’t destroy our industries, because when China dumped heavily subsidized solar panels on our market, we reacted too late and now our industry is gone,” Engin Eroglu, the chair of the European Parliament’s China Delegation, told VOA in a written response.

China said it opposes the tariffs passed by the EU but reiterated its “political will” to resolve the issue through negotiations. “China will take all possible measures to firmly defend the interests of Chinese enterprises,” a Chinese Ministry of Commerce spokesperson said in a statement released on Friday.

While the tariffs will take effect on October 31, the EU plans to continue negotiations with China with the possibility of reaching a deal that may resolve the longstanding trade dispute.

Division within EU

Despite Friday’s vote, which Gunter describes as a test case for the “de-risking” agenda that von der Leyen has been promoting since 2023, experts say the objection from some member states, especially Germany, highlights the division that remains in the EU.

“While EU member states more or less agree that there is a security risk that undermines the bloc’s competitiveness in the long run, there is still division over how aggressively the EU should push back against those risks,” said Zsuzsa Anna Ferenczy, an expert on EU-China relations at National Dong Hwa University in Taiwan.

Ferenczy said Germany’s decision to vote against the tariffs raises questions about the country’s commitment to support collective, EU-level responses to challenges posed by China.

Friday’s outcome “suggests that Berlin doesn’t share the sense of urgency to take concrete measures to invest in the bloc’s competitiveness by addressing Beijing’s distortive trade practices,” she told VOA in a phone interview.

Over the last few months, China has launched an influence campaign that aims at pressuring some EU member states to vote against the proposed tariffs on Chinese EVs.

Beijing initiated a series of retaliatory probes into specific European commodities, such as dairy products and French brandy, and dangles potential investment deals in front of individual EU countries.

Additionally, Chinese Commerce Minister Wang Wentao met in Europe late last month with foreign trade and industry leaders in countries including Germany and Italy. Spain and Germany subsequently became vocal critics of the tariffs.

Ferenczy in Taiwan said China’s influence campaign has been able to hamper the EU’s attempt to use existing mechanisms to counter what it views as Beijing’s unfair trade practices. “The EU has a set of tools, such as the anti-subsidy investigations or inbound investment screening, to deal with economic threats from China and Beijing’s campaign aims to complicate the EU’s efforts to use those tools,” she told VOA.

Economic security

Despite the internal division, the EU is also considering other measures against Chinese companies or commodities the commission views as posing threats to European industries.

The European Commission has taken steps to limit the sourcing of electrolyzer stacks, used to produce hydrogen needed for fuel cells, from China to not more than 25% of total capacity. The bloc is also considering banning Chinese hardware and software in connected vehicles as well as introducing further measures targeting Chinese online marketplaces such as Shein and Temu, which are criticized for flooding the European market with their cheap products.

Some analysts say all these measures represent a significant step in the EU’s overall attempt to safeguard its economic interests in the face of threats posed by China.

“For the first time, the Europeans are threatening China with market access denial,” said Mathieu Duchatel, director of international studies at the French policy group Institut Montaigne.

Gunter in Germany says passing the tariffs against Chinese EVs is a significant first step toward advancing other trade-related measures aimed at ensuring reciprocity and fairness in bilateral trade relations with China.

“If this very narrow, very bureaucratic investigation [against Chinese EVs] received enough opposition from member states, there is a real risk that the rest of the [EU’s] de-risking agenda may go down with it,” he told VOA.

As the EU looks to reduce its critical dependency on China and strengthen its responses to unfair Chinese trade practices, Duchatel told VOA that it remains to be seen whether China will retaliate against certain European industries.

“It’s not a positive trend for the EU-China relations going forward and the question is whether China will try to retaliate against the EU to the point that it creates an escalation cycle,” he said in a phone interview.