The European Union has voted to impose steep tariffs on Chinese electric vehicles , setting the scene for another front in the globe’s escalating trade wars. Friday’s vote came after months of negotiations between the EU and China failed to find a compromise that would avoid what would otherwise almost inevitably be Chinese retaliation and the prospect of an ever-widening trade conflict, similar to that which has upended China’s relationship with the United States in recent years . The rapid penetration of Europe’s EV market by Chinese manufacturers is at the core of the dispute.
Credit: Bloomberg In June, the EU, after an investigation of the subsidies China provides – or has provided – for its EV sector, proposed adding to its base tariff of 10 per cent on all imported EVs by imposing additional tariffs on Chinese-built EVs, that ranged from 17.4 per cent to 38.1 per cent.
The rate set for individual manufacturers depended on the degree of co-operation received from the companies. The proposed tariffs were quite explicitly framed as leverage to get China to engage and change its industry policies, which have led to a flood of cheap EV and other “green” imports to the EU . The Europeans don’t want a repeat of their experience with solar panels, where heavily subsidised Chinese products wiped out Europe’s solar manufacturing sector.
While the subsequent negotiations hinged on proposals that would have imposed minium prices and maximum volumes on EV imports.