By Philip Blenkinsop

EU’s Crucial Vote on Tariffs for Chinese Electric Vehicles

BRUSSELS (Reuters) – European Union members face a pivotal vote on Friday regarding potential tariffs of up to 45% on imports of Chinese-made electric vehicles in the bloc’s most significant trade case, which might provoke retaliation from Beijing.

The European Commission, which oversees the bloc’s trade policy, has proposed final duties for the next five years to address what it considers unfair Chinese subsidies after a year-long anti-subsidy investigation.

Under EU rules, the Commission can impose tariffs for five years unless a qualified majority of 15 EU countries representing 65% of the EU’s population votes against the plan.

Reuters reported on Wednesday that France, Greece, Italy, and Poland would support the tariffs, potentially averting a blocking majority.

If a qualified majority isn’t reached, the EU executive can adopt the tariffs; however, it could propose amendments to secure broader support.

Germany, the region’s top economy and a major car producer, is expected to vote against the introduction of tariffs, as informed sources told Reuters on Thursday. German carmakers, who rely on China for almost a third of their sales, have strongly opposed the tariffs, with Volkswagen stating they are “the wrong approach.”

Spain’s economy minister, previously a tariff supporter, urged the EU to “keep negotiations open… beyond the binding vote” for a deal on prices and relocating battery production to the bloc.

Spanish Prime Minister Pedro Sanchez has also suggested that the EU reassess its stance following his visit to China.

Some EU members are wary of Beijing’s possible retaliation. Beijing has initiated probes into imports of EU brandy, dairy, and pork products as potential retaliatory measures.

The EU’s relationship with Beijing has toughened over the past five years, now recognizing China as both a partner in some areas and a systemic rival.

The Commission estimates China’s surplus production capacity for electric vehicles at 3 million annually, which is significantly more than the size of the EU market. With 100% tariffs imposed by the U.S. and Canada, Europe is a prime target for these exports.

The EU executive remains open to negotiating alternatives to tariffs with China and may reconsider a previously rejected price undertaking, which includes establishing minimum import prices and volume caps.

One option under discussion includes establishing minimum import prices based on vehicle range, battery performance, length, and whether the vehicle is two- or four-wheel drive.

The proposed tariffs range from 7.8% for Tesla to 35.3% for SAIC and other companies deemed non-cooperative in the EU investigation. These tariffs would be in addition to the EU’s standard 10% import duty for cars.