by Hasan Muhammad

The European Union's internal clash over Chinese electric vehicles has entered a new phase. On October 4, the European Commission’s proposal to impose countervailing duties on battery-powered vehicles from China secured enough support from member states to move forward with tariffs. Yet, what was most striking was the notable number of abstentions, particularly from countries that have recently leaned toward strengthening ties with Beijing.

The proposed tariffs, introduced in June, were rooted in claims that Chinese electric vehicles benefit from state subsidies, giving them an unfair edge over European manufacturers. China, however, has staunchly denied these accusations, asserting that the EU's actions are nothing more than protectionism masquerading as fairness. Beijing insists that it has never subsidized its EV industry and condemns the EU’s decision as not only unjustified but also illegal under international trade norms.

As the EU moves ahead with its tariffs, the question remains: how will this decision reshape not only trade relations but the geopolitical landscape between two economic giants vying for dominance in a rapidly evolving industry? The European Commission’s claim that high tariffs on Chinese electric vehicles aim to protect fair competition feels more like political theater than sound economic policy. These tariffs, which carry a strong whiff of protectionism, do little to bolster the EU's own electric vehicle industry and instead risk souring China-EU economic ties-a move that seems decidedly short-sighted.

A closer look at how this all unfolded reveals a tale driven more by politics than by rational market analysis. The anti-subsidy investigation that led to the proposed tariffs wasn’t born out of cries for help from struggling European businesses. Unlike past cases, where such measures were in response to complaints from the private sector, this time around it was political pressure - mainly from France and a few other member states - that pushed the Commission into action.

What’s concerning is that this sets a dangerous precedent. Rather than fostering innovation and competition, Europe seems to be retreating behind a wall of tariffs and trade barriers. And let’s be honest, picking a fight with China - an economic powerhouse -isn’t exactly in Europe’s best interest. The future of EU-China relations could be in jeopardy, and for what? A temporary, politically driven shield for local industries that may not even need it.

According to Transport & Environment, a respected Brussels-based environmental group, Chinese-made electric vehicles represented only about 8 percent of the European Union's EV market in 2023. This small market share raises legitimate questions about the European Commission’s justification for its investigation. The Commission based its case on “threats of economic injury,” not actual damage - a shaky premise that seems to conflict with the very principles of fair trade the EU claims to uphold. What is more troubling is that the investigation seemed to disproportionately target Chinese domestic brands. Tesla, which manufactures vehicles in China and dominates the EV export market to Europe, received a relatively mild tariff of 7.8 percent. In stark contrast, Chinese companies like SAIC, the largest EV exporter from China to the EU, are facing a punitive tariff of 35.3 percent. This discrepancy suggests a selective application of penalties, undermining the credibility of the Commission's process.

The Commission’s handling of the investigation also raises serious concerns about transparency and due process. Chinese firms were bombarded with excessive information requests, including demands for proprietary data like battery formulas -an overreach that could easily be seen as an abuse of investigative powers. The rushed timeline provided to these companies further eroded the integrity of the process, leaving little room for meaningful defense.

Chinese companies have risen to prominence, not because of government subsidies, but due to intense domestic competition, innovative strides in smart driving technology, and an impressive supply chain. China's rapid rollout of infrastructure like public charging stations has further solidified its advantage. Interestingly, it’s the fierce competition from Tesla and European manufacturers that has driven much of this innovation, not handouts.

Green transition is a priority on both sides, as both China and the EU push for economic shifts that align with sustainable development. They may be competitors in this race toward a greener future, but they also complement each other in critical ways - whether in raw materials, technology, or capital. Given the scale of the climate crisis, their cooperation isn’t just desirable; it’s essential. Together, they have the power to lead the world through the challenges of climate change, and a trade war would only undermine that potential.

Editor's Note: The writer is a freelance columnist on international affairs based in Karachi, Pakistan. The article reflects the author's opinions and not necessarily the views of China Economic Net.