Europe Expected to Approve Higher Tariffs on Electric Cars From China

The European Union is expected to support wielding tariffs on electric vehicles made in China, seeking to prevent unfair competition.

European countries are expected on Friday to approve an increase in tariffs to as much as 45 percent on electric cars imported from China, a move that officials said would help protect European carmakers from a glut of cheaper vehicles subsidized by Beijing.

The vote, by the 27 countries in the European Union, will impose additional tariffs ranging from 7.8 percent for Tesla cars made in China to 35.3 percent for vehicles made by the Chinese automaker SAIC, with duties for other automakers falling somewhere in between. Those rates will come on top of the European Union’s existing 10 percent tariffs on all imported cars.

Leaders in Brussels say the duties are aimed at creating a level playing field for automakers in Europe and their competitors in China, rather than to close the European Union market to Chinese imports.

But European countries are divided on the issue. France, Italy and Poland support the tariffs, while Germany remains opposed. Spain initially supported them but on a visit to China last month, the country’s prime minister urged Brussels to consider a compromise.

To block the tariffs, 15 countries whose populations amount to 65 percent of the European Union’s total inhabitants would need to vote against them.

Chinese leaders have spent recent weeks traveling through Europe’s capitals, meeting with leaders from member countries and representatives in Brussels to try to reach an agreement that would prevent the tariffs from taking effect. European leaders said that although they were legally required to vote on the tariffs, they remained open to continuing talks on the issue with China.

The additional tariffs stem from an E.U. investigation into government subsidies given to electric vehicles made in China. The European Commission has indicated that it is open to continuing negotiations with China even after the vote, and the tariffs could be dropped, even after they have taken effect, should the two sides reach an agreement.

“The conclusions of the investigation is not necessarily the end of consultations on finding a solution,” Martin Lucas, the commission’s director-general in charge of trade defense, told the European Parliament on Monday.

The duties, which would come into effect on Oct. 31 and remain for five years, would still be significantly lower than the 100 percent tariffs imposed by the United States, Canada or Turkey.

President Emmanuel Macron of France has pushed his country’s backing of the tariffs, insisting on Wednesday that the level of support that the Chinese automakers received from the state were “unbearable” and harmful to the European market.

“Broadly, we have to protect the level playing field in all the different sectors of our industry,” he said.

Among those countries opposed to the tariffs is Germany, whose automakers including BMW, Mercedes-Benz and Volkswagen are all heavily invested in China, is concerned that the Chinese will retaliate against the tariffs.

“That is why negotiations with China on electric vehicles must continue,” Germany’s chancellor, Olaf Scholz, said in Berlin on Wednesday. He suggested the European Union look at other areas where Chinese competition was hurting Europeans, such as steel.

The automotive sector is crucial to Europe, employing 13.8 million people and accounting for 7 percent of the overall E.U. economic output. But sales have been falling, along with demand, leading manufacturers to consider layoffs and factory closures from Belgium to Germany to Italy.

Despite weaker overall demand for electric cars in Europe, China is taking a larger share of the market. Registration among owners of electric vehicles built in China has increased sevenfold in the past three years, according to the European Commission.

But some analysts point out that concerns about a tit-for-tat trade conflict with China were overblown, citing China’s growing dependence on Europe.

“China really needs the European market, especially with the U.S. market closing down to Chinese products,” said Noah Barkin, a senior fellow at the German Marshall Fund. “China is going to respond if the E.U. introduces duties, but I doubt whether that response will be an over the top response.”