Last Friday, the European Commission, after difficult negotiations, finally gained enough support to impose tariffs of up to 35.3% on Chinese imports of electric vehicles, according to the South China Morning Post, a well-known international media outlet in Hong Kong.
Despite extensive lobbying efforts by China and Germany to block the decision, only five votes were cast against, far from the required 15 votes. It can be said that this result has made some politicians in Brussels "relieved", but at the same time, they are also quite worried about the "countermeasures" that China may take.
Observers have complained about the EU's approach, arguing that, on the one hand, the EU's approach is to keep future-oriented green technologies out, which is contrary to the EU's long-term low-carbon environmental protection; On the other hand, China's domestic market is large enough that electric vehicles are far from saturated, and the EU's "closed country" will only cause problems for itself, while China will become an absolute pioneer in global green mobility.
Fragmentation within the European Union
Although some European leaders, including Germany Chancellor Olaf Scholz, strongly opposed the tariff negotiations on electric vehicles with China, Germany's allies, such as the Netherlands, ultimately chose to support the tariff policy, indicating that there are still huge differences within Europe on the issue of China.
The positions of the two core countries, Germany and France, are opposed, with France supporting tariffs and Germany firmly opposing. Germany Chancellor Olaf Scholz has even called other European leaders several times to hope they will side with him, but these efforts have not yielded tangible results.
Although there was some disunity within the EU in the vote, the final tariff policy allowed European Commission President Ursula von der Leyen, known as the "number one executor of the United States mission," to continue her hardline China policy.
At the same time, it also adds some diplomatic weight to the upcoming United States presidential election and the possible return of Trump to the White House.
After the results of the vote were announced, the Chinese side did not remain silent. China's Ministry of Commerce has said it plans to take countermeasures against the EU in November, which could include anti-dumping duties on brandy from France and restrictions on the supply of certain critical minerals. It is foreseeable that the economic and trade relations between China and the EU will face more uncertainties in the coming period.
At the same time, Germany's automakers have strongly criticized the tariff decision. A Mercedes-Benz spokesman said the punitive tariffs would weaken the long-term competitiveness of the entire auto industry.
Volkswagen CEO Brummer, on the other hand, called for investment and cooperation between the two sides to solve the problem, rather than creating more resistance through tariff barriers. He also warned that possible countermeasures by China would hit European automakers hard.
BMW CEO Zips called the vote a "fatal signal" for the European automotive industry, stressing that an agreement between the European Commission and China needs to be reached as soon as possible to prevent further escalation of the trade conflict.
The underlying impact and outlook of tariffs
The EU's decision to impose high tariffs on Chinese electric vehicles has far-reaching political and economic considerations.
From an economic perspective, the EU's goal is to create a more level playing field for local businesses. However, the reality is that the European auto industry is facing the dilemma of declining sales, and Chinese-made electric vehicles are quickly dominating the market due to their high cost performance and technological advantages, which puts huge pressure on traditional European automakers.
For traditional auto powerhouses such as Germany, they know very well that tariffs alone will not solve the fundamental problem.
The European automotive industry needs not only time, but also government support in terms of infrastructure development, such as charging and hydrogen refueling facilities. In addition, more favourable green energy policies, tax incentives, and an adequate supply of raw materials are needed.
To truly gain a competitive advantage in the field of electric vehicles, European countries must also invest more in technology research and development and production efficiency, and at the same time adopt policies to guide more companies to set up factories locally, so as to reduce their dependence on imports.
From a political point of view, for some EU politicians, they need to weigh not only their own economic interests, but also their relations with allies such as the United States (or, to put it bluntly, the need to carry out United States "orders").
In recent years, the United States has adopted a more conservative and restrictive policy toward China, especially in the high-tech sector. The EU's tariff decision this time also has the meaning of showing goodwill to the United States, aiming to maintain a united front with United States.
For von der Leyen, this is not only support for her policy proposition, but also a demonstration to the United States and other allies that the EU is capable of acting in concert on important issues.
However, there are also concerns about bringing in more Chinese investment. Countries such as France and Spain hope to use the tariff policy to attract more Chinese companies to set up factories in Europe, so as to boost local employment and economic development. But this view is not without controversy within Europe.
According to a report released this week by research firm Rhodium Group, the introduction of Chinese electric vehicle technology could lead Europe to become overly reliant on China for key green technology products, which is at odds with the current policy direction of European countries to improve cybersecurity and data privacy.
Moreover, such an open-door policy could lead to inconsistencies between Europe and its G7 allies, especially United States, on China.
It is worth noting that although the EU hopes to promote the development of Europe's domestic electric vehicle industry through additional tariffs, there are still many bottlenecks in Europe in terms of electric vehicle charging facilities, green energy access and raw material supply.
The European Automobile Manufacturers' Association sent a letter to the European Commission this month calling for an extension of the phase-out of internal combustion engine vehicles, pointing to the lack of necessary infrastructure to support the growth of electric vehicles.
"We currently lack the important conditions needed to achieve zero-emission vehicle production and popularization: charging and hydrogen fueling infrastructure, a competitive manufacturing environment, affordable green energy, purchase and tax incentives, and a steady supply of raw materials, hydrogen and batteries," they mentioned in the letter. ”
A little summary
In addition to the economic and political impact, the changes in the social level cannot be ignored.
The introduction of tariffs is likely to have a direct impact on the average consumer, especially as the price of electric vehicles rises, which may reduce consumer desire to buy, and European consumers will lose the opportunity to trade in new, comfortable and advanced electric vehicles at affordable prices.
This is undoubtedly a new challenge for EU governments that are promoting green mobility. At the same time, people in some EU countries are also worried that a tough stance on China may lead to a further deterioration of bilateral relations, which in turn will affect cooperation in other areas.
Overall, the EU's decision to impose tariffs on China's electric vehicles is undoubtedly a test of differences of opinion within Europe, as well as a major test for China-EU relations.
In the future, it remains to be seen how effective the implementation of tariffs will be and whether it can really help the European auto manufacturing industry get out of the predicament, and the author has a negative attitude towards this.
On the other hand, with the gradual development of China's countermeasures, the game between China and the EU in the economic and trade fields is likely to become more and more intense.
In any case, what the EU is doing now is a bit unwise, and I am afraid that it will soon reap the consequences.