E-Car Tariffs: Intense Talks Await EU and China

After the introduction of provisional additional tariffs on electric cars from China, intensive negotiations lie ahead for Brussels and Beijing. Both sides have expressed their interest in finding a solution - whether this will succeed remains uncertain. For instance, Vice Chancellor Robert Habeck (Greens) personally negotiated in China nearly two weeks ago but did not achieve a breakthrough. The parties now have four months to reach a decision on whether to also demand permanently high special duties.

The EU Commission had previously conducted an elaborate investigation to examine to what extent electric cars from China benefit from subsidies that distort competition. The result was published by the authority yesterday in a regulation over 200 pages long. From the EU's perspective, the matter is clear: There are unfair subsidies, and the European automotive industry faces potential harm. However, the German automotive industry sees things quite differently.

Many markets are taking stronger action against China

Other third countries are proceeding significantly more vehemently against imports from the Far East. China may be the largest car market in the world, but for Beijing itself, many markets have already become more costly. The United States imposed duties of 100 percent on e-cars in May, effectively blocking the market for imports from China.

"The Americans are now closing off their market, as are Brazil, Mexico, and Turkey," Commission President Ursula von der Leyen recently told the Redaktionsnetzwerk Deutschland.

Thus, Europe remains an attractive market for Chinese companies for the time being. A negotiated solution with Beijing is being given a chance in Brussels. 

The preliminary tariffs imposed by the EU authority are in some cases significantly lower than those of the USA: 17.4 percent for the manufacturer BYD, 19.9 percent for Geely, and 37.6 percent for SAIC.

For other companies, 20.8 percent is foreseen, and for those that did not cooperate in the investigation, a punitive tariff of 37.6 percent would be levied. The tariffs are added to an existing tariff rate of ten percent. 

Positive Reactions from German Members of the European Parliament 

German MEPs view the Commission's approach - unlike German politicians with government responsibilities - rather positively. The chairman of the CDU/CSU group in the European Parliament, Daniel Caspary, spoke of a clear message:

“The EU will not allow itself to be led around by the nose in world trade.”

The chairwoman of the Internal Market Committee in the EU Parliament, Anna Cavazzini, also sees the tariffs as a right decision to protect the industry from unfair dumping. 

This openly contradicts her party colleague and Baden-Württemberg's transport minister Winfried Hermann. He had said:

“This is by far the dumbest idea of the EU Commission.”

He fears disadvantages for the German industry. Economic Minister Habeck, similar to Finance Minister Christian Lindner (FDP), had urged that one must react to dumping, but warned against a possible tariff competition. 

The chairman of the Trade Committee in the European Parliament, Bernd Lange, emphasized that a constructive dialogue between Beijing and Brussels is important.

“In such trade disputes, there are never any winners,” said the SPD politician. 

In Germany, the approach of the EU Commission is causing concern, as retaliatory measures are feared that could particularly affect German car manufacturers. Additionally, German companies produce cars in China for export. FDP deputy parliamentary group leader Lukas Köhler emphasized that punitive tariffs on e-cars must remain only a provisional measure.