Vote on Imposing Tariffs on Chinese Electric Cars Scheduled for October 4th by EU
The European Union (EU) is set to vote on October 4 to impose tariffs on imported electric vehicles made in China, with potential rates as high as 45%. This move comes after the European Commission found that China unfairly subsidises its electric vehicle (EV) industry, a decision that could put European manufacturers at a disadvantage.
Germany and Spain have warned against imposing such tariffs, stating that it could trigger a trade war. German Economy Minister Robert Habeck and Spanish Prime Minister Pedro Sanchez have both spoken out against the proposed tariffs, expressing concerns about the potential for a tariff war with China.
The 15 EU member states that together represent 65% of the bloc's population and can exert a possible veto effect on new tariffs are not explicitly listed, but typically include the most populous countries such as Germany, France, Italy, Spain, Poland, and others. If a qualified majority of these member states does not oppose the tariffs, new duties as high as about 35% will kick in from November for five years.
China has denied any unfair activity on its part and has threatened retaliatory tariffs on European products such as dairy, brandy, pork, cars with large engines, and more. However, talks between the EU and China can continue even if member states adopt the tariffs. Any solution to the issue must be in line with World Trade Organization rules, address the impact of China's subsidies, and be something the EU can monitor for compliance.
The proposed tariffs are part of a draft regulation that member states have received. The new date for the vote could still change due to last-minute negotiations with Beijing to find a resolution that would avoid the new levies. Habeck has been working to find a political solution that would avoid a tariff war with China.
Last year, the total trade volume between Europe and China was 739 billion euros. The new tariffs would be on top of the existing 10% rate, which could significantly impact the trade relationship between the two regions. The EU and China are discussing a negotiated solution that would include a mechanism to control prices and volumes of exports, but so far, the EU has rejected proposals offered by China.
The outcome of the vote on October 4 remains uncertain, and the potential for a trade war between the EU and China looms large. Both sides are eager to find a solution that benefits their industries and maintains a harmonious trade relationship.
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