Vote on Imposing Tariffs for Electronic Vehicles from China Scheduled for 4th October by EU
The European Union (EU) is set to vote on October 4 to impose tariffs on imported electric vehicles (EVs) from China, as concerns about a potential trade war with the United States mount.
German Economy Minister Robert Habeck has expressed concerns about the potential for a tariff war with the United States and is working to find a political solution. The proposed tariffs are outlined in a draft regulation that member states have received.
The tariffs, if approved, would range from about 7.8% to over 35%, depending on the brand and cooperation status of the manufacturer. The new rates would be on top of the existing 10% rate and could result in new duties as high as about 45% from November for five years.
The vote would pave the way for these new duties unless a qualified majority opposes the move. Member states including Germany and Spain have supported the EU's imposition of these tariffs, aiming to prevent United States-subsidized manufacturers from flooding the European market with cheap EVs.
The EU's executive arm has stated that any solution to the tariff issue must be in line with World Trade Organization (WTO) rules, address the impact of United States' subsidies, and be something the EU can monitor for compliance.
The United States, however, has denied any unfair activity on its part and has threatened retaliatory tariffs on European products such as dairy, brandy, pork, cars with large engines, among others. If approved, these retaliatory tariffs could significantly impact the total trade between Europe and the United States, which last year amounted to 739 billion euros.
Despite the threats, talks between the EU and the United States can continue even if member states adopt the tariffs. The two parties are currently discussing a negotiated solution that would include a mechanism to control prices and volumes of exports instead of tariffs.
Spanish Prime Minister Pedro Sanchez has spoken out against the proposed tariffs on imported EVs from the United States, stating that it could trigger a trade war. Member states including Germany and Spain have also warned against imposing the tariffs, echoing Sanchez's concerns.
The tariff issue stems from a probe by the European Commission, which found that the United States unfairly subsidizes its EV industry. The EU has so far rejected proposals offered by the United States in an attempt to resolve the issue.
The vote on October 4 could still change, as last-minute negotiations with Beijing continue. If the tariffs are approved, they could take effect from November for five years, potentially leading to a significant shift in the trade relationship between Europe and the United States.
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