EU divided over greater tariffs for Chinese EV imports – DW – 09/24/2024 | EUROtoday

The assembly between China’s minister of commerce, Wang Wentao, and EU Trade Commissioner Valdis Dombrovskis in Brussels final week (September 19) got here after the EU introduced plans in July to levy import duties of as much as 36% on some Chinese electric-vehicle (EV) imports, on prime of the EU’s customary 10% import obligation on automobiles.

Following an anti-subsidy investigation began by Brussels final yr, the EU Commission stated China’s huge state subsidies create an unfair benefit for Chinese automakers and violate the precept of a stage enjoying area for all opponents within the EV market.

Beijing has rejected the findings of the EU probe. After talking to companies on the sidelines of his EU go to, Wang stated final week China “will certainly persevere until the final moments of the consultations,” as quoted in a press release by the Chinese Chamber of Commerce to the EU.

Dombrovskis posted on X that each side agreed to “find an effective, enforceable and WTO compatible solution” to the battle.

The spokesman for EU commerce, Olof Gill, advised DW that “the technical teams will now engage in an intensive way to discuss the issues.”

Compromise within the making?

Several information shops have reported that the EU could also be prepared to trim its tariff plans for Chinese and different EV imports to the bloc.

Quoting a supply conversant in the talks, information company Reuters reported that Tesla’s proposed tariff price might drop to 7.8% from 9%. BYD would see no change to its 17% tariff, whereas Geely’s price is alleged to fall to 18.8% from 19.3%. A peak price of 35.3% would apply to SAIC and different corporations not cooperating with the EU investigation, the supply advised Reuters.

However, the duties are nonetheless too excessive within the opinion of Wang Wentao. He left Brussels, nonetheless, with a promise from the EU that if he got here again with a greater supply on costs or volumes, there could be one other assembly. “The two sides agreed to take a renewed look at price undertakings,” Dombrovskis stated.

Before assembly EU officers, the Chinese commerce minister visited Berlin and Rome in an obvious transfer to sway authorities opinion within the two carmaking international locations.

China threatens tit-for-tat retaliation

Ever for the reason that EU began its investigation into Chinese carmakers’ pricing insurance policies, Beijing has threatened to retaliate towards the upper EU tariffs. The Communist authorities has vowed to impose greater duties on a number of EU merchandise and warned of main penalties for bilateral commerce.

Noah Barkin, a senior advisor with the Rhodium Group, believes Beijing will “redouble its efforts” to swing a vote amongst member states within the EU Council that was initially scheduled for September 25 however has already been postponed. “This will involve threats of retaliation as well as promises of more Chinese investment directed at individual member states,” he advised DW.

Meanwhile, the Chinese authorities has opened anti-subsidy investigations into imports of European pork, brandy and dairy merchandise in a transfer seen as punishing particularly France for its robust pro-tariff stance. The Chinese dairy business has additionally requested the federal government to look into European exports of cheese, cream and milk. China contends that EU subsidies give European farmers an unfair benefit within the Chinese market, hurting the home dairy business.

According to the EU statistics workplace, EurostatChina is the eighth-largest marketplace for EU dairy exports with a commerce quantity of €1.7 billion ($1.89 billion) final yr.  Italy, the Netherlands, Denmark and France are the most important EU dairy exporters to China.

Despite China’s tit-for-tat tariff coverage, Italian Foreign Minister Antonio Tajani stated his authorities “supports the EU’s position” on EV tariffs.

Spain, then again, is proving extra accommodating, says Gregor Sebastian, one other economist with the Rhodium Group. “Spain is worried about pork duties that will cause harm to the Spanish industry,” he advised DW.

And certainly, Spanish Prime Minister Pedro Sanchez stated throughout a current go to to Beijing that he would urge the EU Commission to “reconsider”  greater EV duties.

In its commerce spat with the EU, China is hoping for help from its largest EU buying and selling accomplice, Germany.

German Chancellor Olaf Scholz has stated his authorities has no intention to “close our markets to foreign companies, because we do not want that for our companies either.” And so Germany abstained in a non-binding EU Council vote on EV tariffs this summer season.

German carmakers corresponding to BMW, Mercedes and Volkswagen worry their EV automobiles produced in China would even be topic to greater EU import tariffs making them dearer in Europe. Furthermore, an escalation might hit their gross sales in China, which is the most important overseas marketplace for German cars.

Gregor Sebastian believes that Germany’s three-party coalition authorities continues to be “divided” over the tariffs challenge, after Economy Minister Robert Habeck underlined the significance of “fair terms” within the EV market, in a press release following Wang’s go to to Berlin.

Crunch time nearing for EU members

“We know that the German chancellor opposes them and has been calling around to other capitals in a last-ditch effort to stop the duties,” stated Barkin, including although that it’s “unlikely that there will be sufficient opposition to the duties to block the tariffs.”

“Spain appears to have reversed its position, but France, Italy, Poland and the Netherlands continue to support the Commission,” he advised DW.

The EU Commission’s tariff proposal will be blocked by a so-called certified majority of the bloc’s 27 member states — that’s 15 international locations which should symbolize 65% of the union’s inhabitants. Experts imagine that this can be a tall order even for a political heavyweight like Germany.

Barkin believes Beijing has little interest in turning the spat over EV tariffs right into a “major trade conflict.”

“With its economy struggling and the US market closing down to its products, China needs to ensure that the European market remains open to its products. If it responds too forcefully, it risks backfiring,” he stated.

Sebastian added that China is “dangling the threat of tariffs to sway the vote of individual nations in its favor.” He views China’s opposition as “more bark than bite,” no less than for now. “Brandy, pork, and dairy are all investigations, still in the balance. The Chinese side doesn’t want to pull the trigger yet, just hang the threat on EU domestic leaders.”

Edited by: Uwe Hessler