Trade with China at a crossroads: decisive EU Council vote on electric vehicle tariffs

The trade dispute between the European Union and China regarding electric vehicles (EVs) has reached a critical point: the representatives of the member states are to vote on Friday, October 4, in the EU Council, on the imposition of definitive taxes on the imports of electric vehicles produced in the largest Asian country, according to the websites Euractiv.com and g7.hu. The overcharging of these vehicles was decided by the European Commission following an anti-dumping investigation aimed at balancing the European car market, which has been affected by massive state subsidies given by the Chinese government to domestic manufacturers such as SAIC, Geely and BYD. The vote by representatives of EU member states was supposed to be cast on September 25, but was postponed for new diplomatic negotiations between the EU bloc and China.

The investigation into China's subsidies to electric vehicle manufacturers was launched following European Commission President Ursula von der Leyen's State of the Union address last September. The commission accused China of excessively subsidizing domestic manufacturers, thus distorting competition in the European car market. In this context, the Commission has proposed additional duties of up to 36.3% on top of the standard 10% duty on vehicle imports. If these taxes are approved, they will be valid for a period of five years, but their introduction depends on the vote of the EU member states. According to the voting rules of the European Union, to prevent the introduction of these taxes, 15 member states, representing at least 65% of the population of the Union, must vote against the proposal.

Until the vote, Beijing decided to continue negotiations through its diplomatic representatives in Brussels to avoid the introduction of taxes. At the same time, countries such as Cyprus, Malta, Hungary and Slovakia have already opposed these taxes in an advisory vote that took place in July. However, the balance could be tilted by the change in the position of some key countries. Spain, which initially backed the introduction of taxes, recently indicated it would change its vote, and other member states such as Sweden and the Czech Republic have yet to make a clear decision.

Sweden, for example, delayed the final decision, in the context in which the car manufacturer Volvo, owned by the Chinese company Geely, plays an important role in the Swedish economy. Meanwhile, Prague has been misinterpreted by the Commission as being in favor of the taxes, although the Czech government has consistently refused to express a firm position, fueling diplomatic tensions between the Czech Republic and Brussels.

The EU is trying to counter the dominance of Chinese companies in the EV market with strategies that mirror approaches previously taken by China. Brussels wants to force Chinese manufacturers to invest in European factories and work with local suppliers in the hope of reducing reliance on Chinese technologies. The October 4 vote therefore represents a crucial moment in the EU-China trade dispute over electric vehicles. Although the outcome is uncertain, the stakes are high for both sides. While the EU tries to protect the European car market, China is fighting to maintain its dominant position in the electric vehicle sector and avoid tariff measures that could hurt its heavily subsidized auto industry.

We mention that. according to data from the European Association of Automobile Manufacturers (ACEA), in the first half of 2024 approximately 40.9% of electric vehicles imported into the European Union come from China. The cited source also shows that in 2023, the member states of the European Union imported a total of 438,034 electric vehicles from China, worth 9.7 billion euros, which means a tripling in value and volume compared to 2022 of these imports. The increase in the European purchase of electric cars from China was determined according to ACEA experts by competitive prices and the growing presence of Chinese brands such as BYD and MG in the European market.