vote scheduled for October 4

China will know its fate in a few days. European countries seem mixed.

The European Union is set to vote on imposing tariffs on electric vehicles imported from China. The vote, scheduled for October 4, comes after an investigation concluding that China is unfairly subsidizing its auto industry.
While some countries, such as Germany and Spain, are warning of a trade war with China, discussions are underway to find a solution that could avoid these new taxes.

Europe plays the protection card

The European Union wants to protect its automobile industry at all costs by voting on October 4 on customs duties on electric vehicles imported from China. This measure, in preparation for several weeks, responds to an investigation carried out by the European Commission. The latter revealed that China massively and unfairly subsidizes its car manufacturersthus distorting competition within the European market. The project, which was submitted to member states, deeply divides European capitals.
On the one hand, several countries support this approachsaying it is crucial to protect European manufacturers who are struggling to compete with the ultra-competitive prices of Chinese electric vehicles. On the other hand, countries like Germany and Spain call for cautionfearing an escalation towards a trade war which could affect strategic sectors, in particular those which depend on exports to China.
Remember that these subsidies allow brands like BYD or NIO to offer electric vehicle models at extremely competitive priceswell below those of European manufacturers. Brussels therefore considers that the imposition of customs duties is essential to restore fair competition. If these customs duties are adopted, they will reach up to 35%, in addition to the 10% already applied.
This measure would come into force from November for a period of five years, unless Member States oppose it by a qualified majority. For the moment, discussions are continuing, in particular with pressure from the Chinese side to avoid the establishment of these trade barriers.

A divided Europe facing a powerful China

China was quick to react. Beijing denies any form of unfair subsidy and has threatened to impose retaliatory customs duties on European products. Worse still for the European automobile industry, China plans to target premium European carsa crucial segment for brands like BMW, Mercedes and Porsche, which generate a significant part of their sales in China. It must be said that the European Union and China are closely linked on a commercial level.
In 2023, trade between the two parties reached 739 billion euros asserts Automotive News Europe. The imposition of customs duties on electric vehicles could therefore quickly degenerate into a real trade war, with devastating consequences for several sectors of the European economy. Despite the desire to protect its automobile industry, Europe remains divided on the strategy to adopt against China. Germany, which has major business interests in China, and Spain, whose economy also depends on trade relations with Beijing, are arguing for a negotiated solution.
The German Minister of Economy, Robert Habeckexpressed his fears about an escalation: “I am not a fan of countervailing duties, as they will likely lead to countermeasures and involve us in a tariff war, or even a trade war, with China.” Other Member States, more concerned about the future of the European automobile industry, strongly support the idea of ​​these additional taxes.
However, discussions between the EU and China have not completely broken down. The two sides continue to negotiate an alternative solution, which could include a mechanism to control prices and export volumes, rather than the imposition of customs duties.
However, any solution must comply with the strict rules of theWorld Trade Organization (WTO) and respond to European concerns about the impact of Chinese subsidies.