The European Union and China have finally agreed to negotiate the looming import tariffs on Chinese-made electric vehicles in Europe, potentially avoiding a trade war.
EU, China seek compromise to avoid escalation
Officials from both the EU and China have compromised to initiate consultations over the recently announced tariff that targets Chinese EVs competing in the European market, according to a press release from the Chinese government on Saturday.
“China’s Commerce Minister Wang Wentao and Valdis Dombrovskis, executive vice president of the European Commission, agreed on Saturday to start consultations on the issue of the European Union’s anti-subsidy investigation into Chinese electric vehicles (EVs).”
Government of China
The European Commission asserted its willingness to host technical talks with Chinese officials in Brussels this week.
“The EU side has emphasised that any negotiated outcome of the investigation must be effective in addressing the injurious subsidisation.”
A Commission spokesperson
Beijing calls for scrapping duties before July 4th deadline
Beijing reportedly wants the EU to dump its planned preliminary tariffs on Chinese-made electric vehicles by July 4 as it has not yet recovered from the US’ major tariff hike of up to 100%.
For context, the EU’s recently announced provisional duties of up to 38.1% on Chinese EV imports will take effect on July 4 while the bloc investigates the alleged excessive and unfair subsidies.
In response, China warned to take necessary measures to protect Chinese companies if the EU holds on to its move against China-made EVs.
Talks aim to resolve dispute over alleged Chinese subsidies
Industry observers reportedly suggest that the best outcome of the negotiations would be for the EU to cancel its tariff plans before the July 4 deadline.
A senior fellow at influential EU affairs think tank Bruegel does not believe the planned tariffs could be scrapped before elections in France on June 30 and July 7, Reuters reports, citing the Global Times.
“The Commission can’t change a decision it has been pondering for months on months on months. Yes, China is putting pressure on the member states, but they would need to vote with a qualified majority against the Commission.”
Alicia Garcia Herrero, senior fellow at Bruegel
The EU is set to make a final decision on tariffs against China-made EVs by November 2 at the end of the anti-subsidy probe.
Beijing is ready to hit back if the EU does not back down, blaming Brussels as wholly responsible for intensifying the trade tensions.
The Chinese government recently launched an anti-dumping probe into EU pork imports. The report also revealed that China is cooking up an anti-subsidy investigation into EU dairy goods imports and tariffs on large-engined petrol cars.
All that said, it would be best for both economies to compromise to avoid a looming trade war that could affect customers and the wider shift to electric vehicles.
