Will EU tariffs on electric vehicles spark a global trade war?

Bloomberg reports that EU member states have voted to impose tariffs of up to 45% on electric vehicles made in China, ignoring warnings from some members that the dangerous move risks triggering an “economic cold war” with Beijing.

The European Commission, the bloc’s executive arm, recently concluded its anti-subsidy investigation into Chinese imports of battery electric vehicles. The findings supported the Commission’s move to implement the obligations, which would take five years.

Sources familiar with the vote told Bloomberg that ten member states voted in favor of the taxes, while Germany and four others voted against — and 12, including Spain, abstained.

The new tax rate will be up to 35 percent for foreign electric vehicle manufacturers exporting from China. There is already a 10% tax, meaning the rate for some foreign electric vehicles imported in bulk could be as high as 45%. We have ensured additional color at rates here.

The commission published this statement:

Today, the European Commission’s proposal to impose definitive countervailing duties on imports of battery electric vehicles (BEVs) from China won the necessary support from EU member states to enact the tariffs. This is another step towards closing the Commission’s anti-subsidy investigation.

In parallel, the EU and China continue to work to explore an alternative solution that should be fully WTO compatible, appropriate to address the harmful subsidization established by the Commission’s investigation, monitored and enforceable.

A Commission implementing regulation incorporating the final findings of the inquiry must be published in the Official Journal by 30 October 2024 at the latest.

As previously noted, the charges are part of an anti-subsidy investigation launched earlier this year by the Commission. Approximately 100 companies were investigated. The big finding included market-distorting subsidies throughout China’s electric vehicle supply chain.

Meanwhile, the bloc has actively pushed far-left climate change policies to shrink its economy. The whole bloc is a mess with threats of recession coming from Germany stalls in the automotive manufacturing industry.

Former European Central Bank president Mario Draghi warned last month that “state-sponsored competition from China” was threatening member states. Last year, the EU traded 739 billion euros ($815 billion) with China.

Earlier, Hungarian Prime Minister Viktor Orban said EU tariffs on China could trigger an “economic cold war”…

European carmakers, including Mercedes-Benz, Stellantis, BMW and Volkswagen, all have a massive footprint in China, which could be jeopardized if Beijing retaliates.

But wait, wait a second. Haven’t far-left Western leaders, including many in the US, called Trump’s tariff plans against China “appalling”? Hypocrisy at its best.

By Zerohedge.com

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