EU States Greenlight Extra Tariffs On EVs From China

EU countries gave a definitive green light on Friday to hefty additional tariffs on electric cars made in China, despite German warnings that it will spark a trade war with Beijing.

The European Commission -- which provisionally approved the step in June after an inquiry found that Beijing's state aid to auto manufacturers was unfair -- now has free rein to impose steep tariffs for five years from end October.

China has slammed the "protectionist" tariffs and warned they would trigger a trade war, but talks on addressing the subsidy dispute will continue between the two sides despite Friday's vote.

Ten member states including France, Italy and Poland supported imposing the tariffs of up to 35.3 percent, coming on top of existing duties of 10 percent, several European diplomats told AFP.

Only five including Germany and Hungary voted against while 12 abstained including Spain and Sweden.

Although the tariffs did not win support from a majority of states, the opposition was not enough to block them -- which would have required at least 15 states representing 65 percent of the bloc's population.

That leaves the choice on moving ahead in the hands of the European Commission -- in charge of trade policy for the bloc -- which said it had "obtained the necessary support for the adoption of tariffs".

The EU duties have pitted France and Germany against each other, with Paris arguing they are necessary to level the playing field for EU carmakers against Chinese counterparts.

Germany, renowned for its strong auto industry and its key manufacturers including BMW, Volkswagen and Mercedes heavily invested in China, urged the commission not to go ahead.

"The EU Commission... should not trigger a trade war despite the vote in favour" of the tariffs, Finance Minister Christian Lindner said on social media platform X. "We need a negotiated solution."

Berlin has strong arguments on its side: Beijing has threatened to retaliate forcefully and has already opened probes into European brandy, dairy and pork products imported into China.

China tried in vain to stop the duties coming into force through dialogue, but talks have so far failed to produce an agreement that satisfies the EU.

The commission has said any duties could be lifted later if China addresses the EU's concerns.

"The EU and China continue to work hard to explore an alternative solution," commission trade spokesperson Olof Gill said.

A group representing Chinese companies in Europe urged the EU to "delay" implementing the "protectionist" tariffs.

"We strongly encourage the EU to... prioritise resolving disputes and trade tensions through consultations and dialogue", the China Chamber of Commerce to the EU said in a statement.

French and German automakers are divided over the duties.

German auto giant Volkswagen said they "are the wrong approach and would not improve the competitiveness of the European automotive industry", as it urged talks with Beijing to avoid a trade conflict.

Meanwhile, US-French-Italian auto group Stellantis said it "takes note" of the vote, repeating its commitment to "free and fair competition", echoing similar cautious comments made by the umbrella group, the European Automobile Manufacturers Association.

The extra duties also apply, at various rates, to vehicles made in China by foreign groups such as Tesla -- which faces a tariff of 7.8 percent.

Brussels says it aims to protect European carmakers in a critical industry that provides jobs to around 14 million people across the European Union but does not benefit from hefty state subsidies like in China.

Canada and the United States have in recent months imposed much higher tariffs of 100 percent on Chinese electric car imports.

In an indication of how fears had spread in Europe before the final vote, Spanish Prime Minister Pedro Sanchez reversed its initial support and asked Brussels last month to "reconsider".

Hungary has also been vocal in its opposition. Before the vote, Prime Minister Viktor Orban blasted the tariffs as "the next step in the economic cold war", which he said was "a huge threat to Hungary".

Trade tensions between China and the EU are not limited to electric cars, with inquiries launched by Brussels also targeting Chinese subsidies for solar panels and wind turbines.

The bloc faces a difficult task as it tries to foster its clean tech industry and invest in the green transition without sparking a painful trade war with China.