‘It’s not a lockdown’: EU competition commission chief defends tariffs on Chinese electric vehicles

“For some companies (with) close cooperation – they were very willing to open their books – (they will find) lower tariff bands. For non-cooperative companies (that’s where) the higher tariff band applies,” Vestager said.

Cooperative companies – including Western carmakers Tesla and BMW – will face tariffs of 20.8 percent, while those deemed non-cooperative will face higher tariffs of 37.6 percent.

BEIJING VOWS TO RETALIATE

The duties are temporary and a final decision on the matter will be taken in four months as talks between the two sides are ongoing.

Vestager said communication was a key element of the negotiations, and German Vice Chancellor Robert Habeck visited Beijing two weeks ago to ease tensions.

China has threatened wide-ranging retaliation over the tariffs. Since January, Beijing has launched “retaliatory-of-retaliatory” investigations into a range of European imports, including brandy and pork.

Despite rising tensions, China’s Commerce Ministry said it still hopes to reach a consensus with the EU on an electric vehicle tax through dialogue.

With tariffs in place, electric vehicle makers will have to decide whether to cover costs or raise prices.

There are concerns that more expensive electric vehicles will put off European consumers and undermine the group’s goal of becoming carbon neutral by 2050.

However, EU officials have said that while cheap Chinese goods may help achieve European environmental goals in the short term, they could prove detrimental to EU industry in the medium to long term because local companies unable to compete could go bankrupt.

MORE RESEARCH ON CHINESE IMPORTS

The tariffs follow a series of EU investigations into Chinese imports including tinplate, wooden flooring, medical equipment, wind turbines and solar panels.

Vestager said it was the same Chinese strategy that led to the tariffs.

“(About) 15 years ago, European (solar) companies were invited to China. There was a technology transfer. There were subsidies for production in China. Slowly but surely, imports to China were closed,” she said.

She added that solar exports from China have flooded the European market at attractive prices thanks to subsidies and low wages.

As a result, only about 3 percent of the solar panels installed in Europe last year were manufactured in the EU, she added.

While tariffs are not a “miracle cure”, EU rules on fair conditions will ensure that European businesses can continue to compete on a level playing field.

Under the Foreign Subsidies Regulation, companies must notify and obtain consent from the government of a non-EU country if financial support for a company could give it an unfair advantage over domestic companies in the EU.

Vestager added that while European countries are not free from subsidies, they are controlled so as not to distort the level playing field.