EU's extra tariffs on China-made EVs spark backlash

The European Union (EU) voted on Friday to impose tariffs of up to 45 percent on imports of battery electric vehicles (EVs) manufactured in China, a move that has ignited significant opposition from various EU member states and the automotive industry.

In response, the China Council for the Promotion of International Trade expressed its firm opposition on Saturday, adding that China and the EU should resolve their differences through dialogue in order to reach a solution that aligns with the interests of both parties.

China's Ministry of Commerce on Friday also expressed strong opposition to the EU's decision, considering it "unfair, non-compliant and unreasonable," while acknowledging the EU's political willingness to continue negotiations.

Technical teams from China and the EU will resume talks on October 7.

A divided bloc

The European Commission stated that the proposal had received the necessary support from EU member states for adoption. The vote revealed a divided bloc: 10 members backed the tariffs, 12 abstained, and five – including Germany, the EU's largest economy and a key automotive producer – voted against them.

"Despite the vote for potential punitive tariffs against China, Ursula von der Leyen's EU Commission should not trigger a trade war. We need a negotiated solution," Germany's Finance Minister Christian Lindner wrote on social media platform X on Friday.

A day earlier, the minister also warned on the platform that tariffs on Chinese EVs "would be wrong," he said. "We have to speak plainly and negotiate with China – but trade wars only have losers."

His remarks were echoed by Hungarian Prime Minister Viktor Orban, who said in an interview with state radio on Friday, "What they are making us do right now, or what the EU wants to do, is an economic Cold War."

Prior to the vote, Hungarian Foreign Minister Peter Szijjarto stated on Thursday that the country is "strongly against" the proposal, saying it is "so harmful and dangerous" and that the Brussels bureaucrats are jeopardizing the future competitiveness of the European economy.

Finland, which abstained from the vote, thought there was not enough proof of damage caused to the EU by the so-called Chinese state support to the EV industry, Xinhua reported.

Criticism from the industry

The announcement has also triggered an outcry from the automotive industry, which thought it was a mistake and urged for further negotiations.

Hildegard Mueller, president of the German Association of the Automotive Industry, said in a statement issued on Friday that Germany's veto is the "right signal" from the government, which has backed the interests of the European and German automotive industry and its employees with a view to the economy, prosperity and growth.

Mueller said the EU decision is "a further step away from global cooperation" and called for negotiations between the EU and China, saying they "must prevent an escalation – ideally avert the tariffs so that we don't risk a trade conflict."

German automaker Mercedes-Benz said the tariffs are "a mistake that can lead to far-reaching negative consequences."

Its CEO, Ola Kallenius, said at the Berlin Global Dialogue on Wednesday that direct tariffs are "a very crude instrument," advocating for better solutions that would not hinder access to crucial markets.

Volkswagen said the tariffs are "the wrong approach" and called for the two sides to "constructively continue" the negotiations.

BMW CEO Oliver Zipse called the vote "a fatal signal" for the European auto industry. He urged for a quick settlement between the European Commission and China to "prevent a trade conflict from which no one gains."

Geely Holding, which owns Sweden's Volvo, expressed its "great disappointment" in the decision, saying it may potentially hinder EU-China economic and trade relations and ultimately harm European companies and consumer interests.

Consumers affected

Concerns extend beyond the industry to consumers.

According to a study released by the Kiel-based economic research institute Kiel Institute for the World Economy in May, once the EU imposes tariffs on China-made EVs, the price of EVs in Europe will be significantly affected, resulting in a significant increase in the cost for local consumers.

The institute projected that a 20 percent tariff could lead to a 25 percent drop in imports of Chinese EVs. "Converted to the almost 500,000 vehicles imported in 2023, this corresponds to an estimated 125,000 units worth almost $4 billion," said the simulations.

"The decline would largely be offset by an increase in production within the EU and a lower volume of EV exports, which would likely mean noticeably higher prices for end consumers," said the institute.

Mueller also emphasized that the proposed tariffs "would not only further increase the risk of a mutual trade conflict but would also make vehicles considerably more expensive for consumers."

She noted that the potential damage caused by countervailing duties outweighs the potential benefits of this instrument.