The EU's tariff gamble on Chinese EVs

Editor's note: Adriel Kasonta, a special commentator for CGTN, is a London-based foreign affairs analyst and commentator. He is the founder of AK Consultancy and former chairman of the International Affairs Committee at Bow Group, the oldest conservative think tank in the UK. The article reflects the author's opinions and not necessarily the views of CGTN.

The European Union's decision to impose up to 45 percent tariffs on Chinese-made electric vehicles (EVs) is being hailed by some as a bold move to protect Europe's fledgling auto industry. 

But beneath the surface, this so-called victory for President of the European Commission Ursula von der Leyen's geopolitical strategy reeks of a pyrrhic triumph – a win that could prove more costly than beneficial. The vote, narrowly divided among EU member states, exposes the fragile political tightrope von der Leyen is walking as she seeks to align the bloc's policies with the United States' growing antagonism toward Beijing. However, the looming 2024 U.S. elections, with Donald Trump potentially returning to the White House, could turn this gambit into a strategic misstep.

The tariffs stem from the European Commission's anti-subsidy investigation into Chinese EVs launched last year, reflecting growing concerns that China is flooding the European market with cheap, subsidized electric cars. The vote was far from unanimous – 10 countries supported the measure, five opposed it, and 12 abstained. While technically, this allowed the Commission to proceed with the tariffs, the deep divisions among member states reveal a lack of cohesive support for this aggressive posture towards China.

The economic case for the tariffs is weak. China has built significant EV production capacity, with around 3 million vehicles available for export – double the size of the EU market. The numbers alone point to China's dominance in the sector, with Chinese-built EVs accounting for over a quarter of EU sales in 2024, up from a mere 3.5 percent in 2020.

However, the EU auto industry itself is hardly united behind these measures. Major carmakers, especially from Germany, rely heavily on the Chinese market. Germany's powerful auto industry, which represents nearly a third of its sales in China, has largely opposed the tariffs, recognizing the potential economic blowback. Yet, as Noah Barkin, a senior fellow at the German Marshall Fund, pointed out in a recent newsletter, the issue transcends economics. Berlin's sway over China-EU policy, once formidable, has now been deliberately sidelined.

Barkin goes further, drawing a chilling comparison between Chancellor Olaf Scholz's reluctant acquiescence to the tariffs and former Chancellor Angela Merkel's ill-fated defense of German industrial interests that ended in the Nord Stream pipeline catastrophe. "The last time a German chancellor ignored the concerns of the country's closest European allies, the European Commission, and the United States out of blind fealty to German industry, it ended with a strategic catastrophe," he noted ominously.

It's not hard to see the parallels. The EU's move to punish China as an economic measure is, in reality, a geopolitical maneuver designed to curry favor with Washington, particularly in light of Ursula von der Leyen's ambition to stay aligned with U.S. containment policies against Beijing. In such a scenario, Brussels could find itself sandwiched between its commitment to American strategic interests and the increasingly untenable costs of those policies on its own industries.

The Commission's investigation into Chinese EV subsidies wasn't just about trade. It was a response to Ursula von der Leyen's increasingly hawkish stance on China, laid out in her landmark March 2023 speech. She characterized China as a revisionist power seeking to reorder the global system to its own advantage through unfair trade practices and assertive foreign policy moves.

It's clear that her rhetoric and subsequent policy initiatives like the EV probe are aimed at making the EU a more active participant in the U.S.-led containment of China. But in trying to prove her toughness on Beijing, Ursula von der Leyen risks driving a wedge between member states, many of which are unwilling to risk their bilateral relationships with China.

Twelve countries' abstention in the tariff vote speaks volumes. While they didn't outrightly oppose the tariffs, they are reluctant to back Brussels' increasingly adversarial stance towards Beijing. Their hesitation suggests that economic pragmatism still trumps political posturing for many EU members. China's role as a major trading partner and investor is too important to jeopardize for a policy that looks more like a gesture of loyalty to Washington than a serious attempt to protect Europe's economic interests.

For European consumers, the consequences could be immediate and painful. Tariffs on Chinese EVs will likely drive up prices, making electric vehicles – a vital component of the EU's carbon neutrality goals – less affordable. This could slow down the bloc's progress towards its ambitious climate targets, further complicating its position on the global stage. If the EU undermines its own green transition by engaging in protectionist measures, it risks being seen as hypocritical in its climate advocacy.

In the long run, China might heed the wisdom of Leo Tolstoy's observation in War and Peace: "The strongest of all warriors are these two – time and patience." Rather than reacting to Brussels's provocation, China has every reason to bide its time and observe the transatlantic dynamics at play. With a U.S. presidential election on the horizon and the possibility of renewed U.S.-EU trade tensions, Beijing's best move might be to remain patient.

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