TMTPost -- Following a make-or-break vote, the European Union members have decided to move forward with a plan to levy up to 45% tariffs on Chinese-made electric vehicles for five years.

Credit：the European Commission

The European Commission announced Friday its proposal to impose definitive countervailing duties on imports of battery electric vehicles (BEVs) from China has obtained the necessary support from EU Member States for the adoption of tariffs, calling it another step towards the conclusion of the Commission's anti-subsidy investigation.

Based on the European Commission's latest draft proposal,Tesla appears to be the big winner as the EU will impose an extra 7.8% tariff on Tesla EVs originated from China, much lower than the 20.8% under the provisional duties that took effect in July.

The Commission has slightly lowered tariff rates that three sampled Chinese EV makers. The additional individual duties on BYD, Geely and SAIC would be 17%, 18.8% and 35.3%, respectively. Other cooperating companies would be subject to a 20.7% tariff, while non-cooperating companies would be slapped with a 35.3% rate. All of these additional tariffs are on top of the EU’s standard 10% import duty of cars.

In the meantime, 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, said the European Commission.

The European Commission didn’t specify how the EU governments voted on the Chinese EV tariffs Friday. Reuters cited a source close to the matter that 10 EU members are in favor of tariffs and five voted against, with 12 abstentions. It is reported that the members backed tariffs include Bulgaria, Denmark, Estonia, France,  Ireland, Italy, Latvia, Lithuania, Netherlands and Poland. Germany, the top economy and major car producer of the region, Hungary, Malta, Slovenia and Slovakia reportedly opposed hiking the tariffs. Austria, Belgium, Croatia, Cyprus, Czech, Finland, Greece, Luxembourg, Portugal, Romania, Spain and Sweden declined to vote either for or against higher tariffs, according to the Reuters report. A Bloomberg report echoed the aforementioned divided vote.

The announcement cleared hurdles for the EU to introduce five-year definitive tariffs following an anti-subsidy investigation. The European Commission started the probe into the BEV imports from China on October 4, 2023. Less than a year later, the Commission determined to hit the Chinese imports with provisional duties as it concluded it found the BEV value chain in China benefits from unfair subsidization, which is causing a threat of economic injury to the European Union BEV producers.  

The European Commission said on July 4 it imposed provisional countervailing duties of up to 37.6%, on top of the ordinary BEV import duty of 10%, on imports of BEVs from China. The regulatory body proposed to add up to 35.3% to the current 10% duty faced by Chinese exporters. Since a qualified majority of 15 EU members  completed, the proposed definitive tariffs are set to go into effect from next month for five years.

The European Commission initiated the anti-subsidy investigation without a formal complaint from the industries within the EU, and the rulings were "non-compliant, unreasonable, and unfair," said the the Ministry of Commerce of China (MOFCOM) as Chinese Commerce Minister Wang Wentao and his counterpart agreed to ramp up efforts to find a solution to the EV tariff disputes during Wang's visit to Europe last month.

China urges the EU to implement the important consensus reached by the leaders of China, France, and the EU on properly addressing economic and trade frictions through dialogue and consultation, and to take proactive actions to meet China halfway, according to the MOFCOM. It cautioned that China will resolutely take necessary measures to protect the legitimate rights and interests of its enterprises, if the EU insists on implementing unreasonable tariffs.

A spokesperson of the MOFCOM reaffirmed China’s firm opposition to the EU’s additional EV tariffs following the key vote Friday. The spokesperson stated that China strongly opposes the EU’s protectionist practices, which it considers unfair, non-compliant and unreasonable.

The China Chamber of Commerce to the EU (CCCEU) expressed deep disappointment with the vote outcome and voiced strong dissatisfaction with the EU’s use of protectionist trade measures.

“In parallel, the Chamber observed that negotiation teams from China and the EU remain actively engaged in discussions, striving to find viable solutions,” CCCEU said in a Friday statement. It urged the EU to approach the final measures with caution, delay the implementation of the tariffs and prioritize resolving trade tensions through consultation and dialogue.