EU tariffs on Chinese EVs draw criticism

German Chancellor Olaf Scholz on Wednesday criticized the European Union for its decision to impose punitive tariffs on electric vehicles made in China, just a day ahead of an EU summit in Brussels.

In a wide-ranging speech to the German parliament Bundestag, Scholz expressed that 17 EU member states were skeptical about the tariffs, as well as all the executives of carmakers with whom he had spoken.

He was referring to the Oct 4 divided vote in which only 10 EU member states voted in favor of the new tariffs of up to 35.3 percent, while 12 member states abstained and five states, including Germany, opposed.

"My request is that we come to an agreement between China and the European Union," he told Germany's lawmakers.

German automakers, including BMW, Mercedes-Benz, and the German Association of the Automotive Industry, known as VDA, have opposed the tariffs.

A Chinese team returned to Beijing last weekend after conducting eight rounds of intensive talks with the EU side starting Sept 20 to find a solution. While some progress was made, the two sides still had huge differences and failed to find a solution.

The two sides agreed to continue talks on a price commitment solution that is acceptable to both.

The Chinese Chamber of Commerce for Import and Export of Machinery and Electronic Products, which represents 12 Chinese EV makers, voiced dissatisfaction on Wednesday that the EU has separately approached some of the 12 EV makers for minimum price commitment while talking to the Chinese team at the same time, saying it would "shake the foundation and confidence" of the negotiations.

Olof Gill, the European Commission spokesman for trade and agriculture, said negotiations are ongoing.

"The European Union remains fully open to finding a negotiated solution," he said at a Wednesday news briefing in reply to China Daily questions. He added that such a solution must be WTO compatible, adequate in addressing the risk to EU injury identified in the investigation, and enforceable.

He did not directly address the concern expressed by the Chinese chamber and only said the EU has strictly adhered to WTO rules.

Carl Bildt, co-chair of the European Council on Foreign Relations, expressed his hope that there won't be a full-scale trade war between China and the EU.

"They have no interest in a trade war, either from the EU side or the Chinese side," he said on X on Monday.

"We should not forget that, for the moment, there are a hundred times more cars sold by European companies in China than Chinese vehicles, or cars exported to Europe," said the former Swedish prime minister.

Uri Dadush, a nonresident fellow at the Brussels-based think tank Bruegel, called the EU's tariffs on Chinese EVs "a mistake".

'A mistake'

"The duties are a mistake. They will harm EU citizens more than help them, and they will eventually backfire on the European automotive industry," he said in an article on Bruegel's website on Oct 8.

Dadush noted that Chinese-made EVs, many in joint ventures with EU and US carmakers, now match world quality standards and are much lower-priced, and subsidies in China and elsewhere now play a minor role in market outcomes.

"The price/quality advantage of Chinese EVs appear to reflect China's vast economies of scale (it produces 60 percent of all EVs), low labor costs, a technology and materials edge in batteries, intense competition among over one hundred Chinese-based producers and their early mover advantages," he wrote.

He argued that duties would not make EU's EV makers more competitive because it would "insulate them from global competitive pressures, reducing the incentives to cut costs and innovate", adding that many EU citizens potentially willing to green their vehicles will be unable to do so due to the duties.