Which countries are involved? What are the reasons behind the EU's proposal to impose additional taxes on China? How will future China-Europe trade be affected? Let's take a look together!

01 The EU's proposal to impose taxes on Chinese electric vehicles has been passed

1.1 Voting results

In the vote on the EU's proposal to impose additional tariffs on Chinese electric vehicles, 10 countries voted in favor, including Bulgaria, Denmark, Estonia, France, Ireland, Italy, Lithuania, Latvia, the Netherlands, and Poland, accounting for 45.99% of the EU's population.

5 countries voted against, namely Germany, Hungary, Malta, Slovenia, and Slovakia, accounting for 22.65% of the EU's population.

12 countries abstained, including Belgium, the Czech Republic, Greece, Spain, Croatia, Cyprus, Luxembourg, Austria, Portugal, Romania, Sweden, and Finland, accounting for 31.36% of the EU's population.

According to the EU's decision-making procedures, 15 member states representing 65% of the EU's population must vote against to block the plan to impose additional tariffs. This vote did not meet this condition, so the proposal to impose additional tariffs was passed.

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1.2 Implementation time and impact of the tariffs

The European Commission will announce the final implementing regulations for the additional tariffs no later than October 30th. This move will pose a significant challenge to Chinese electric vehicle companies. The competitive price advantage may be weakened, and the threshold for entering the European market will be significantly raised.The imposition of additional tariffs of 7.8% on Tesla, 17% on BYD, 18.8% on Geely, 35.3% on SAIC, and 20.7% on other electric vehicle manufacturers surveyed but not individually sampled means that Chinese electric vehicle manufacturers entering the European market will face ultra-high tariffs of up to 45%. This will affect the market share and profit margins of companies, potentially leading some to readjust their market strategies.

For the European market, this is not a good thing either.

On one hand, the current automotive import tariff in Europe is 10%. With the imposition of high tariffs, the price of electric vehicles will rise, increasing the cost for consumers to purchase cars, which may reduce their willingness to buy electric vehicles, thereby affecting the development of the European electric vehicle market.

On the other hand, Chinese electric vehicle companies have certain advantages in technological innovation and cost control. The imposition of tariffs may reduce competitive pressure in the European market, which is not conducive to the development and innovation of the local electric vehicle industry in Europe.

At the same time, this could also affect the stability of the global automotive supply chain, hindering China-Europe economic and trade cooperation and global efforts to combat climate change.

02 Strong reactions from all parties

2.1 Divergent attitudes among European countries

Countries such as France and Italy support the imposition of tariffs, mainly because they believe that the EU has the right to take protective measures when local companies face "unfair competition." They are concerned that the influx of Chinese electric vehicles will impact local industries. Last year, one out of every three electric vehicles sold in France was produced in China.The chairman of the French Automobile Industry Association, Châtel, stated that the European Union (EU) needs to take a firm stance while also acknowledging the necessity of establishing partnerships with Chinese automotive companies, but with clear rules.

Germany, Hungary, and other countries oppose the imposition of additional tariffs.

The German Finance Minister, Lindner, warned against triggering a trade war. German automotive giants BMW, Mercedes-Benz, and Volkswagen, which have substantial business roots in China, are concerned about the impact. Volkswagen even condemned the EU's "wrong approach." Approximately one-third of German car manufacturers' sales come from China, and they fear that the imposition of additional tariffs could lead to retaliatory measures from China.

Hungary considers the plan to impose additional tariffs "harmful and dangerous." Hungarian Foreign Minister Szijjártó stated that bureaucrats in Brussels would strangle the future competitiveness of the European economy.

Spain and other countries abstained. Carlos Queiroz, Spain's Minister of Economy, Trade, and Enterprise, wrote to the European Commission urging against the imposition of additional tariffs on Chinese electric vehicles. He pointed out that Spain is the second-largest car producer in the EU, and the automotive industry faces significant risks. It is necessary to achieve a balance in technology and politics to avoid large-scale confrontations with major countries like China.

2.2 Enterprises and Industry Associations Speak Out

Major German car manufacturers, such as BMW Chairman Oliver Zipse, pointed out that the German government should vote against the imposition of additional tariffs in the EU. The planned EU tariffs could "trigger a trade conflict with only losers."

The chairman of the German Automobile Industry Association, Hildegard Müller, praised Germany's vote against the measure, saying it was the right signal to support the economy, prosperity, and growth, as well as the interests of the European and German automotive industries and their employees. She called on the EU to negotiate with China to prevent the escalation of disputes, emphasizing that there are only losers in trade conflicts. The German Automobile Industry Association has proposed to all relevant parties to extend the negotiations.

The German Industry Association also called for continued negotiations to prevent the escalation of Sino-European trade conflicts.

2.3 China Firmly OpposesThe Chinese side has condemned the European Union's move to impose additional tariffs on Chinese electric vehicles as a typical act of protectionism. The Ministry of Commerce of China has clearly stated that the European actions in this case are unfair and non-compliant, and it firmly resists the imposition of such taxes and fees on Chinese electric vehicles. The Chinese electric vehicle industry adheres to market principles and provides high-quality environmental products to the international market. The EU's protectionist measures violate WTO rules, disrupt international trade order, and not only affect China-EU economic and trade cooperation and the EU's own green development pace but may also weaken the synergistic effects of global climate action. Finally, China has indicated that it will take all necessary measures to resolutely safeguard the interests of Chinese enterprises.

03 Analysis of the Reasons for the EU's Additional Tariffs on Chinese Electric Vehicles

3.1 Protecting Domestic Industries

The EU believes that Chinese electric vehicles engage in unfair competition in the market, mainly due to their price advantage and rapid growth in market share. According to statistics, China's electric vehicle exports to the EU account for about 40% of the share, which has put considerable pressure on the EU. The EU claims that the low prices of Chinese electric vehicles are due to substantial state subsidies, and this price advantage distorts the European market, affecting the interests of European domestic manufacturers.However, this perspective has a certain degree of one-sidedness.

The price advantage of Chinese electric vehicles does not stem solely from subsidies.

On one hand, the collaborative efforts in the upstream and downstream of China's new energy vehicle industry chain have continuously reduced production costs. Taking power batteries as an example, the energy density of our country's power batteries has increased, while costs have significantly decreased.

On the other hand, Chinese companies have also achieved remarkable results in technological innovation and economies of scale, which have improved production efficiency and reduced costs.