EU Divided Over Tariffs on Chinese Electric Vehicles

Italy and Spain are supporting EU tariffs on imports of electric vehicles from China, just before a Monday deadline for all 27 EU members. The decision is non-binding but might influence the European Commission's conclusion on provocative duties that could escalate tensions with Beijing. Various EU countries, including Germany and Sweden, are abstaining or undecided.

Italy and Spain are backing European Union tariffs on imports of China-built electric vehicles, government sources revealed ahead of a Monday midnight deadline for all 27 EU members to take their stand on the matter.

The vote is non-binding, but it could influence the final conclusion of the European Commission, which oversees the bloc's trade policy. The Commission set provisional duties of up to 37.6% on EVs imported from China, escalating tensions with Beijing. The EU executive is canvassing EU governments' views in an 'advisory' vote, expected to be considered when deciding whether to follow through with definitive duties in what is the EU's most high-profile trade case yet.

The Commission states the vote is confidential and will not disclose the outcome. Government sources said on Monday that Italy had voted in favour and Spain would do the same. Sweden plans to abstain, according to trade minister Johan Forssell. Germany is also set to abstain, sources said on Friday, in a show of 'critical solidarity' with the Commission.

A number of EU governments are hesitating, with Poland's development ministry still consulting between ministries, and Greece yet to take a position as of Saturday.

A decade ago, the EU executive did not impose tariffs on Chinese solar panels when a large group of EU members did not support them, leading to the collapse of EU manufacturing. The Commission will continue its investigation to determine whether to propose definitive duties, typically applying for five years.

If the Commission pushes for tariffs, they will be subject to a binding vote among EU members, requiring a qualified majority of 15 member countries representing 65% of the EU population to be blocked. The near-four month window before then will allow Brussels and Beijing to negotiate a potential resolution to mitigate tariffs that would impact Chinese producers like BYD, Geely, and SAIC, and Western automakers like Tesla and BMW. Beijing has threatened wide-ranging retaliation.

(With inputs from agencies.)