EU Members in Favor of EV Tariffs Face Biggest Risk of China's Blowback: Expert

TMTPost -- The European Union members that voted for additional tariffs on Chinese-made electric vehicles (EVs) last Friday are facing the biggest risk of China’s blowback, a leading expert in Asia trade policy and supply chain warned.

Credit：Xinhua News Agency

“Those that voted ‘yes’ will certainly be less favorably viewed by Chinese investors,” said Deborah Elms, head of trade policy at the Hinrich Foundation, an Asian-based nonprofit organization that works to advance sustainable global trade. Elms expects additional scrutiny for key sectors like pork and dairy, Bloomberg reported Monday. “Those countries that voted ‘no’ could be receiving more investment as well as potentially avoid or limit challenges to investment operations within China,” said Elms, who also serves on the board of the Trade and Investment Negotiation Adviser at the United Nations.

The European Commission disclosed Friday its proposal to impose definitive countervailing duties on imports of battery electric vehicles (BEVs) from China has obtained the necessary support from EU Member States for the adoption of tariffs. The announcement cleared hurdles for the EU to introduce up to 45% definitive tariffs following an anti-subsidy investigation. Since a qualified majority of 15 EU members completed, the proposed definitive tariffs are set to go into effect from next month for five years.

It was reported 10 EU members are in favor of tariffs and five voted against, with 12 abstentions. The members backed tariffs include Bulgaria, Denmark, Estonia, France, Ireland, Italy, Latvia, Lithuania, Netherlands and Poland. Germany, the top economy and major car producer of the region, Hungary, Malta, Slovenia and Slovakia reportedly opposed hiking the tariffs. Austria, Belgium, Croatia, Cyprus, Czech, Finland, Greece, Luxembourg, Portugal, Romania, Spain and Sweden declined to vote either for or against higher tariffs, according to the Reuters report. A Bloomberg report echoed the aforementioned divided vote.

China has threatened it could take actions to counter the EU’s hiked tariffs on EV imports, such as curbs on pork and dairy products. China started an anti-dumping investigation into brandy imported from the EU on Jan. 5, 2024, which was deemed as the widening trade disputes between Beijing and the bloc. The probe would look at EU-produced brandy in containers holding less than 200 liters imported from Oct. 1, 2022 to Sept. 30, 2023, the Ministry of Commerce of China (MOFCOM) said. It would also investigate any damage done to the Chinese brandy industry from Jan. 1, 2019 to Sept. 30, 2023.

The MOFCOM announced holding an anti-dumping hearing on brandy imported from the EU on July 18 right after the European Commission announced it imposed provisional countervailing duties of up to 37.6%, on top of the ordinary BEV import duty of 10%, on imports of BEVs from China.

The MOFCOM also said on June 17 it will probe into certain pork and pig by-products originating from the EU from Jan. 1, 2023 to Dec. 31, 2023, and will also investigate any damage done to related Chinese industries from Jan. 1, 2020 to Dec. 31, 2023. Chinese authorities will conduct the anti-dumping probe into certain pork and pig by-products imported from the EU through sampling, If the EU’s dumping practice has been confirmed after China’s preliminary investigation and has caused damage to Chinese domestic industries, temporary anti-dumping measures might be taken in accordance with World Trade Organization (WTO) rules and China's anti-dumping regulations, He Yadong, spokesperson for the MOFCOM, said June, responding a question about whether China will levy temporary tariffs on pork imports from the EU at a press after launch of the investigation.

When asked about whether China will open anti-dumping probe on EU dairy imports, the spokesperson He said that the investigation agency will review applications filed by domestic industries in accordance with the law. "If the conditions for filing a case are met, the investigation agency will start the filing procedure, and disclose and release announcements in accordance with the law," said He.

Yuyuan Tantian, a social media influencer affiliated with state broadcaster China Central Television (CCTV), reported June that China is promoting introduction of procedures related to tariff hike on gasoline cars with large displacement engine, more exactly, gasoline cars powered by engines larger than 2.5 liters. Besides possible tariffs on cars, Yuyuan Tantian indicated China can slap with additional brandy import duties since the government is set to announce preliminary decision on the imports.

China’s state media outlet Xinhua New Agency issued a commentary at weekend, claiming the EU's protectionist tariffs on Chinese EVs threaten cooperation, green transition. "Instead of fostering cooperation, these tariffs risk sparking a trade conflict that could harm not only China-EU relations but also Europe's own ambition for a green transition," Xinhua reporters wrote. "The path forward is clear: Protectionist tariffs must be abandoned in favor of continued negotiations," they cautioned.