If media and other reports are accurate, the European Union’s attempts to impose significant tariffs on imports of Chinese-made electric vehicles are encountering difficulties on two fronts.
First, the idea of tariffs is unsettling member states, and Reuters reports that there is no clear evidence of unanimity among the 27 members on the issue.
Second, at least two Chinese carmakers are considering building plants in Europe. BYD is actively looking at Hungary and has just announced a plant in Turkey, which has a customs arrangement with the EU.
Another major carmaker, the 62% state-owned SAIC, is exploring the establishment of a plant for its MG brand of EVs (MG conventional and EVs are also sold in Australia) in the EU, with Spain being a likely location.
Spanish media reports indicate that the plant will be operational by the end of 2027, but some analysts question whether the long lead time is a strategy by SAIC to limit tariffs on imports before then.
BYD will have at least one plant in Europe operational well before then, and from comments in China, it appears that the two plants will produce cars for Europe, with BYD not exporting EVs from China to Europe.
These plans will allow the companies to circumvent the EU tariffs (just as a car plant BYD is considering building in Mexico will improve access to the US and Canada). The European Commission, which oversees the bloc’s trade policy, has set provisional duties of up to 37.6% on EVs imported from China to counter what it describes as unfair subsidies and has canvassed EU member views in a so-called advisory vote.
Reuters reported that a dozen EU members supported the tariffs, four voted against, and 11 abstained, including Germany, which has led the opposition to the tariffs but does not want to be seen opposing the EC and EU openly.
In the vote, France, Italy, and Spain supported the tariffs, while Germany, Finland, and Sweden abstained, government sources told Reuters.
The Commission is expected to consider this vote when deciding whether to impose definitive duties later in the year. If it advocates for duties at the end of its investigation, they will be subject to a binding vote among EU members and would be imposed unless a qualified majority of 15 member countries representing 65% of the EU population votes against them, Reuters reported.
If the voting pattern of the advisory vote were repeated, definitive duties, typically applicable for five years, would then come into force.
However, the large number of abstentions presents a challenge for the EU and EC, as it reflects concerns among many countries about the potential damage a trade war with China could cause.
German carmakers, which made a third of their sales last year in China, have urged the EU to drop the tariffs, which would apply not only to Chinese producers such as BYD, Geely, and SAIC, but also to China-built cars of Western automakers such as Tesla and BMW.
There is also speculation that the EU might negotiate lower tariffs on some German Chinese-made EVs from BMW and VW. VW is the largest European car investor in China, including holding a 75% stake in an EV-only venture with JAC, a local carmaker.