The EU yesterday voted to impose tariffs as high as 45 percent on electric vehicles (EVs) from China in a move set to increase trade tensions with Beijing.
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, including Spain, abstained, sources familiar with the results said.
The decision by the EU comes after an investigation found that China unfairly subsidized its industry. Beijing denies that claim and has threatened its own tariffs on the European dairy, brandy, pork and automobile sectors.
Photo: AFP
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 euros (US$815 billion) in trade with China last year, was split on whether to move forward with the duties.
The EU and China would 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.
The new tariff rates would be as high as 35 percent for EV manufacturers exporting from China. The duties would be on top of the existing 10 percent rate.
Chinese EV makers would have to decide whether to absorb the tariffs or raise prices, at a time when slowing demand at home is squeezing their profit margins. The prospect of duties has prompted some Chinese automakers to consider investing in factories in Europe, which might help them dodge tariffs.
A statement from Geely Holding Group Co (吉利控股集團), which controls Sweden’s Volvo and UK’s Lotus Cars, criticized the decision, saying it was “not constructive and may potentially hinder EU-China economic and trade relations, ultimately harming European companies and consumer interests.”
The additional tariffs already have slowed Chinese automakers’ momentum in Europe, with their sales plunging 48 percent in August to an 18-month low. The region is a desirable destination for the nation’s manufacturers because EVs sell in relatively high numbers and at much more robust prices than other export markets.
The share of EVs sold in the EU that were made in China climbed from about 3 percent to more than 20 percent in the past three years. Chinese brands accounted for about 8 percent of that market share, as international companies that export from China, including Tesla Inc, taking up the rest.
Zhang Yazhou was sitting in the passenger seat of her Tesla Model 3 when she said she heard her father’s panicked voice: The brakes do not work. Approaching a red light, her father swerved around two cars before plowing into a sport utility vehicle and a sedan, and crashing into a large concrete barrier. Stunned, Zhang gazed at the deflating airbag in front of her. She could never have imagined what was to come: Tesla Inc sued her for defamation for complaining publicly about the vehicles brakes — and won. A Chinese court ordered Zhang to pay more than US$23,000 in
‘LEGACY CHIPS’: Chinese companies have dramatically increased mature chip production capacity, but the West’s drive for secure supply chains offers a lifeline for Taiwan When Powerchip Technology Corp (力晶科技) entered a deal with the eastern Chinese city of Hefei in 2015 to set up a new chip foundry, it hoped the move would help provide better access to the promising Chinese market. However, nine years later, that Chinese foundry, Nexchip Semiconductor Corp (合晶集成), has become one of its biggest rivals in the legacy chip space, leveraging steep discounts after Beijing’s localization call forced Powerchip to give up the once-lucrative business making integrated circuits for Chinese flat panels. Nexchip is among Chinese foundries quickly winning market share in the crucial US$56.3 billion industry of so-called legacy
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday held its first board of directors meeting in the US, at which it did not unveil any new US investments despite mounting tariff threats from US President Donald Trump. Trump has threatened to impose 100 percent tariffs on Taiwan-made chips, prompting market speculation that TSMC might consider boosting its chip capacity in the US or ramping up production of advanced chips such as those using a 2-nanometer technology process at its Arizona fabs ahead of schedule. Speculation also swirled that the chipmaker might consider building its own advanced packaging capacity in the US as part
‘NO DISRUPTION’: A US trade association said that it was ready to work with the US administration to streamline the program’s requirements and achieve shared goals The White House is seeking to renegotiate US CHIPS and Science Act awards and has signaled delays to some upcoming semiconductor disbursements, two sources familiar with the matter told reporters. The people, along with a third source, said that the new US administration is reviewing the projects awarded under the 2022 law, meant to boost US domestic semiconductor output with US$39 billion in subsidies. Washington plans to renegotiate some of the deals after assessing and changing current requirements, the sources said. The extent of the possible changes and how they would affect agreements already finalized was not immediately clear. It was not known