EU tariffs on Chinese EVs raise trade war concerns

People visit the booth of BYD at the Automechanika in Frankfurt, Germany, Sept. 11, 2024. (Xinhua/Zhang Fan)

The EU has ignored fresh proposals from Chinese automakers aimed at resolving the dispute over Chinese EVs in the European market, undermining efforts to ease tensions through dialogue.

The decision to impose tariffs on China-made EVs, despite several offers from Chinese manufacturers, has sparked a new wave of outcry within the bloc.

GROWING OPPOSITION

Spanish Prime Minister Pedro Sanchez, during a recent visit to China, voiced his opposition to the proposed EU tariffs on Chinese EVs, urging the EU to reconsider and seek a compromise with China to avoid a trade war. His concerns were echoed by German Chancellor Olaf Scholz, who also criticized the tariff plan.

In May, Swedish Prime Minister Ulf Kristersson warned against levying tariffs on Chinese EVs, saying that "a wider trade war where we block each other's products is not the way to go for industrial nations such as Germany and Sweden."

Hungarian Prime Minister Viktor Orban described the tariffs as a "brutal" punishment against Chinese automakers and called for open competition.

These dissenting voices suggest that the decision to impose tariffs on Chinese EVs lacks unanimous support among all EU member states. "Many believe that this is a step towards a trade war between Europe and China, which will ultimately harm the European economy," said Croatian political analyst Mladen Plese.

German automotive expert Ferdinand Dudenhoeffer, director of the Center for Automotive Research (CAR) in Bochum, said that such a protectionist approach might push EU automakers to increase investments in China, the world's largest car market and a leader in the rapidly growing EV industry.

He warned that protectionism and tariffs are misguided strategies and would result in losses for Germany and the EU.

"The European Commission's punitive tariffs hit German companies and their top products. Cars become cheaper through more competition, open markets, and significantly better business conditions in the EU, not through trade war and market isolation," said German Transport Minister Volker Wissing in a message posted on X.

Norwegian Prime Minister Jonas Gahr Store openly opposed punitive tariffs on Chinese EVs. In a recent interview with Chinese media, he emphasized that as a non-EU member, Norway is not bound by EU policies. "Consumers in Norway should have access to the cars they want to buy," he stated.

Photo taken on June 6, 2024 shows an electric car at a charging station near the European Commission building in Brussels, Belgium. (Xinhua/Zhao Dingzhe)

IMPACT ON AUTOMAKERS, CONSUMERS

The EU's decision to impose tariffs on Chinese EVs, intended to protect the bloc's auto industry, may instead stifle growth and restrict European consumers' access to more affordable Chinese EV models, analysts said.

Germany's auto industry has long thrived in an open market. However, these tariffs are expected to drive up prices, reducing competitive pressure on European automakers to develop more affordable EV models, which are currently in limited supply.

"The European manufacturers do need to be challenged," noted Rico Luman, a senior economist at ING focusing on transport, logistics, and the automotive industry.

Chinese EV makers have gained a competitive edge in the global market through rapid production growth, advanced technology, and cutting-edge innovations, noted Luman.

Sjors ten Tije, manager of the Dutch Association of Electric Drivers, said that European manufacturers rely heavily on Chinese parts and additional tariffs would hamper Europe's automotive development.

Higher tariffs will result in higher EV prices, making it harder for consumers seeking clean transportation to find affordable models, he added.

"The transition to electric driving may be delayed. This could ultimately lead to less available funds for research and development," said Maarten Steinbuch, professor in Systems and Control at Eindhoven University of Technology in the Netherlands.

People visit the booth of Geely at the Automechanika in Frankfurt, Germany, Sept. 11, 2024. (Xinhua/Zhang Fan)

SLOWING DOWN GREEN TRANSFORMATION

Experts warn that in addition to disrupting trade and collaboration between the EU and China, the tariffs on Chinese EVs could jeopardize the EU's planned transition to a greener economy.

Piotr Gadzinowski, former editor-in-chief of the Polish newspaper Trybuna, emphasized that cooperation with China in the EV industry is crucial for the EU to meet its climate goals.

Gadzinowski noted that tariffs on Chinese EVs would impede the promotion of electric vehicles in the EU, especially in countries with low EV adoption.

Supply chain disruptions and the breakdown of collaborative research efforts could negatively impact both European and Chinese manufacturers, further straining EU-China relations, he said.

Eric De Keuleneer, executive director of the Brussels-based University Foundation and Emeritus Professor at the ULB Solvay Brussels School, urged EU policymakers to consider the tariffs' impact on Europe's green transition and industrial development, emphasizing the importance of Chinese support in providing affordable batteries, which would benefit both European consumers and automakers.

Dick Roche, former Irish minister for European affairs, questioned the logic of imposing tariffs on Chinese EVs, given the EU's green transition goals. "Technological change will be a key driver of the green and digital transition in Europe. Like it or not, China happens to be a leader in technologies vital for Europe's progress towards carbon neutrality," he said.