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What sense does the EU's electric vehicle tariff make?

Reality Check

06:29

Editor's note: Why is the EU, despite the heavy pressure from the business circle and consequences ahead, forcing tariffs onto Chinese electric vehicles? Three reasons: For the market, for the United States and for politicians. Take a look at our analysis.

One thing you need to understand is that very few people like this tariff. 

China is super unhappy about it. In a statement released by China's Ministry of Commerce, the European Commission is described as arbitrarily creating and exaggerating China's "subsidy items" as well as abusing the "facts available." The Chinese Foreign Ministry said that "we urge the EU to act on its commitment to supporting free trade and opposing protectionism, and work with us to uphold the overall economic and trade cooperation between the two sides." "China will take all measures necessary to firmly defend our lawful rights and interests."

And Europe's business community isn't thrilled as well. Dutch EV charging station developer Fastned BV said China bringing affordable and attractive vehicles to the region is "good news" and that "it doesn't matter to us in that sense where those cars are coming from." Simon Schutz, the spokesperson of German Association of the Automotive Industry, said "we have always spoken out against the tariffs on E-cars from China because they don't solve the challenges for the European automotive industry, for the German automotive industry."

So, why the tariff? The two Ps: Protectionism and politics. 

Michael Froman, President of Council on Foreign Relations, said in an interview that "the paradigm has shifted, where it's not all about consumers anymore, it's not all about efficiency, getting the cheapest products to the consumers or the cheapest, best products into the hands of the consumers. There's an effort to say, well, we want redundancy, we want resilience, we want security, we want to have our own industry in key sectors even if it means imposing a cost on consumers."

There might be some legitimacy to this argument – but only to certain extent. The EU plans to achieve net-zero emissions by 2050. A key step is to have at least 30 million zero-emission cars on the roads by 2030 and ban new petrol car sales by 2035. Naturally, officials would want to save that market for their own business.

But, based on research, Europe needs to see an almost 50-fold increase in zero-emission cars in circulation on the roads between 2020 and 2030 to achieve its goal. And, as it happens, the EU depends on the Chinese products to do it. From EV battery production, and charging stations, to the number of vehicles produced, Europe lacks the ability to achieve this massive transition it set out without Chinese products. According to a Bloomberg report in April, "Chinese carmakers are more competitive, thanks to technology, local supply chains, brand new transport infrastructure, and lower energy and land costs…China leads the EU and the U.S. in peer-reviewed publications on green technology." Simply put, the EU is shooting itself in the foot with the tariffs.

Now, about politics. First, saying this tariff is about politics is not an accusation. It is admitted. According to POLITICO, one European Commission official said that "for all the talk of an evidence-based solution that is compliant with global trade rules, it is 'a political decision'." Ursula von der Leyen, the current President of the European Commission, was famously known as "Europe's American President." She's said to be very compliant to the U.S. government while ignoring her own people. Her former boss and mentor Angela Merkel even told her once: "Don't forget to talk to us." In May, the Biden administration announced a 100 percent tariff on China's EVs. Now, von der Leyen came out with her own version. 

Very "Europe's American President," isn't it?

But, we also have to remember that all politics is local. Several days before June 5, which was the date the tariff was originally reported to be announced, Reuters ran a piece with sources saying that the tariff announcement might be postponed until after the European Parliament election due to "last-minute technical issue with the document."

What is this "technical issue?" Well, around the same time Reuters' piece was published, news came out saying that von der Leyen's re-election bid was hanging by a thread at that time. Her courtship with Italy's right-wing Prime Minister Giorgia Meloni angered her center-left coalition partners in Brussels: The Socialists and Democrats (S&D) and the Renew.

And these three parties have a very interesting mix of attitudes towards China. Meloni, like von der Leyen, is very pro-U.S. She has not been very friendly with China, but she wants Chinese investments to boost Italy's domestic car production. The S&D is led by the Spanish politician Iratxe Garcia Perez. Chinese carmaker Chery had set up its first European manufacturing site in Spain in 2024. Spanish PM Pedro Sanchez said around 400 million euros will be invested in this plant. Then, the Renew, a liberal group, is led by the party of French President Emmanuel Macron. He's often seen as the "pro-China" Western leader in today's international politics welcomes Chinese investments in electric vehicles and batteries. But, the French government has been a strong advocate for the investigation and tariff.

Is there a connection? Has the tariff been used in political horse trade to save von der Leyen's political future? We can't give a definitive yes. But we certainly can't rule out no. 

So, what sense does the tariff make? It makes sense in that it is born out of rising protectionism and EU politics. It might be great politicking, but not a good policy. So, you tell me, would you make such a decision?

(If you want to contribute and have specific expertise, please contact us at opinions@cgtn.com. Follow @thouse_opinions on Twitter to discover the latest commentaries in the CGTN Opinion Section.)

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