On Additional Tariffs For Chinese Electric Vehicles: Divided European Union, Germany Refuses, France Supports

In 2019, Mercedes-Benz and Geely Holding officially established a global joint venture smart Automobile Co., Ltd. (Doc. Mercedes Benz)

JAKARTA - EU countries are considering and calculating whether to support additional tariffs on Chinese-made electric vehicles, including analyzing the impact if a similar reply is made by China.

Germany, reported by Reuters, July 4, where its automaker made a third of their sales in China, rejected the rate, while France supported it. The majority of countries are still considering pros and cons, according to an informal poll by Reuters.

The bloc will confirm interim fares of up to 37.6 percent on Chinese brands such as BYD, Geely, and SAIC, as well as Chinese-made models from Tesla, BMW, and other western automakers. Automakers are preparing new costs of billions of dollars due to these rates, which analysts say could slow down their expansion in Europe. EU member states will vote in October if the Commission proposes multi-year tariffs at the end of its investigation.

Germany stressed the need for a negotiation solution with Beijing, with its automakers saying tariffs are not the right approach. They considered the negative impact of tariffs outweighed its benefits. In a last attempt to influence negotiations, German auto association urged Brussels to cancel the tariff. Increasing the cost of electric vehicles for consumers also undermined the EU's goal of becoming carbon neutral by 2050.

Meanwhile, the impact of retaliation from Beijing is also worrying that it could include additional tariffs on EU exports such as cognitive, pork, or luxury cars.

The European Commission said tariffs were needed to address low-cost loans, land, and raw materials subsidized by China, with the aim of creating equal conditions. Tariffs can also give the EU an influence in negotiations with Beijing and encourage manufacturers to build cars in the EU.

On the one hand, the investigation of this electric vehicle could be the beginning for the EU in asserting its attitude towards Beijing. An updated 712-page report in April regarding China's interference and subsidy is the strongest sign that Brussels is serious. The report shows that China is not playing with the same rules and opens the door to future cases.