Tension between China and EU over EV tariff escalating

BEIJING

Beijing said on Tuesday it had lodged a complaint with the World Trade Organization over the European Union's decision to impose hefty tariffs on Chinese-made electric cars.

The extra taxes of up to 35 percent were announced on Oct. 29 after an EU probe found Chinese state subsidies were undercutting European automakers, but the move has faced opposition from Germany, which fears provoking Beijing's ire and setting off a bitter trade war.

China slammed Brussels's decision, saying it did not "agree with or accept" the tariffs.

"China will... take all necessary measures to firmly protect the legitimate rights and interests of Chinese companies," Beijing's Commerce Ministry said.

EU trade chief Valdis Dombrovskis said on Oct. 29 that "by adopting these proportionate and targeted measures after a rigorous investigation, we're standing up for fair market practices and for the European industrial base".

But Germany's main auto industry association warned the tariffs heightened the risk of "a far-reaching trade conflict.

The duties will come on top of the current 10 percent on imports of electric vehicles from China.

The new tariffs will last for five years.

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.

Chinese car giant Geely, one of the country's largest sellers of EVs, faces an extra duty of 18.8 percent, while SAIC will be hit with the highest at 35.3 percent.

The tariffs do not have the support of the majority of the EU's 27 member states but in a vote early this month, the opposition was not enough to block them.

The EU launched the probe in a bid to protect its automobile industry, which employs around 14 million people.

France, which pushed for the investigation, welcomed the decision.

But Europe's bigger carmakers, including German auto titan Volkswagen, have criticised the EU's approach.

The extra tariffs are "a step backwards for free global trade and thus for prosperity, job preservation and growth in Europe", the German Association of the Automotive Industry's president Hildegard Mueller said.

Talks continue between the EU and China, and the duties can be lifted if they reach a satisfactory agreement, but officials on both sides have pointed to differences.

Discussions have been focused on minimum prices that would replace the duties and force carmakers in China to sell vehicles at a certain cost to offset subsidies.

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

The EU is not alone in levying heavy tariffs on Chinese electric cars.

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