The European Union (EU) voted on Friday to impose tariffs as high as 45% on electric vehicles from China, threatening a broader trade conflict with Beijing which has already vowed to protect its companies.
Shares in European automakers rose after the vote.
The European Commission, the bloc’s executive arm, can now proceed with implementing the duties, which would last for five years. Ten member states voted in favor of the measure, while Germany and four others voted against and 12 abstained, according to people familiar with the results.
The decision by the EU comes after an investigation found that China unfairly subsidised its industry. Beijing denies that claim and has threatened its own tariffs on European dairy, brandy, pork and automobile sectors.
The bloc is actively trying to reduce its dependencies on China, with former European Central Bank President Mario Draghi warning last month that “China’s state-sponsored competition” was a threat to the EU that could leave it vulnerable to coercion. The EU, which did ?739 billion ($815 billion) in trade with China last year, was split on whether to move forward with the duties.
The EU and China will continue negotiations to find an alternative to the tariffs. The two sides are exploring whether an agreement can be reached on a mechanism to control prices and volumes of exports in place of the duties. “The EU and China continue to work hard to explore an alternative solution that would have to be fully WTO-compatible, adequate in addressing the injurious subsidization established by the commission’s investigation, monitorable and enforceable,” the commission said in a press release announcing the decision.
China’s Commerce Ministry blasted the EU’s decision to impose tariffs on Chinese-made electric vehicles as “unfair” and “unreasonable”, but held out the prospect that the two sides could still “resolve the issue through negotiations”.
China’s trade ministry said technical-level consultations had continued with the EU and were scheduled to resume on Monday.
“China firmly opposes the EU’s draft final ruling, but has also noted the EU’s political will to continue to resolve the issue through negotiations,” it said.
