Europe Raises Tariffs on China’s E.V.s, Confronting a Key Trade Partner

European Union officials say the duties are meant to protect the region’s automakers from what they say are unfair trade practices in China.

The European Union voted on Friday to impose higher tariffs on electric vehicles imported from China, risking tensions with an important trading partner in an effort to protect an industry crucial to Europe’s economy.

The decision affects billions of dollars of trade between two of the world’s biggest economic powers. The move also reveals how the European Union is struggling to reconcile the conflicting interests of its members, some of whom see China as an essential partner while others view it as a dangerous competitor.

The tariffs are much lower than the 100 percent duties imposed by the United States and Canada, but analysts said they reflected Europe’s willingness to build bridges with Washington by taking a tougher stance on Beijing, but without shutting out China entirely.

The vote sends “a signal that there’s an emerging consensus in Europe that stronger pushback against China on the economic front is needed,” said Noah Barkin, a senior fellow at the German Marshall Fund who specializes in Europe’s relationship with China.

Still, the decision exposed the divisions among the 27 E.U. member states over how they should handle the issue with China. Five countries voted to block the tariffs, while 12 abstained.

The tariffs, which take effect on Oct. 31 and will last for five years, go as high as 45 percent. But both European and Chinese officials have said they remain in negotiations to reach an agreement that would address Brussels’s concerns about unfair advantages enjoyed by automakers in China.

“The E.U. and China continue to work hard to explore an alternative solution,” the European Commission said in a statement on Friday, adding that any deal would have to be within the rules set by the World Trade Organization. The vote stems from an investigation that the commission started last year into government subsidies given to electric vehicles made in China, part of a broader push against what the commission describes as anticompetitive behavior from China that has hurt European businesses.

The tariffs were calculated by the level of state support that Chinese automakers received from Beijing. The highest duties are being imposed on manufacturers that disclosed little about their subsidies, while Tesla, which has a large factory in Shanghai, was hit with the lowest because it negotiated with investigators.

China, which had lobbied individual countries to reject the tariffs, criticized the vote and called for the European Commission to postpone the duties while negotiations between the two sides continued. China is the European Union’s second most important trading partner, after the United States. Last year, the two traded goods worth 739 billion euros, or $811 billion.

China’s commerce ministry said the move represented “unfair, noncompliant and unreasonable protectionist practices.” And the European Union Chamber of Commerce in China said the lower prices of Chinese electric vehicles stemmed not from subsidies but from a supply chain that had developed through fierce market competition inside the country.

Talks will continue between Chinese and E.U. officials on Monday, a ministry spokesman said in the statement. He added a thinly veiled threat of retaliation if the tariffs were enacted, saying China would “take all measures to firmly safeguard the interests of Chinese companies.”

China has already started investigations against subsidies on European goods, including dairy, brandy, pork and luxury cars.

European officials have said the tariffs could be paused or even ended should they reached an agreement with the Chinese that addressed their concerns about unfair advantages.

The Biden administration has voiced concerns that internet-connected Chinese cars and trucks pose a national security risk because their operating systems could send sensitive information to Beijing, but Europeans are more concerned about protecting their automotive industry. Last year, that industry provided 13.8 million jobs and accounted for 7 percent of the region’s economic output.

In Germany, which voted against the tariffs, automakers and the government are concerned that the move could set off a trade war with China. Germany’s three biggest automakers, BMW, Mercedes-Benz and Volkswagen, are all heavily invested in China.

The decision by Chancellor Olaf Scholz of Germany to vote “no” reflected the pressure that he faced from the country’s leading autoworkers union, as well as from industry leaders, who warned that increased duties could harm competition when overall demand for cars, including electric vehicles, in Europe was shrinking and production costs in Germany remained stubbornly high.

“It is the right signal from the German government, which — with a view to the economy, prosperity and growth — has backed the interests of the European and German automotive industry and its employees on such an important issue,” said Hildegard Müller, the president of the German Automobile Association. Hungary, Malta, Slovenia and Slovakia also voted against the tariffs.

The European Union faces a shrinking share of the global economy and is lagging far behind the United States and China. A report published last month by Mario Draghi, a former president of the European Central Bank, found that Europe needed to prioritize protecting its automotive plants and companies from state-subsidized foreign producers. Tariffs would “help level the playing field” while keeping Europe open to benefiting from productivity gains from China, according to the report, which was the result of a yearlong study requested by the European Commission on the causes of Europe’s competitiveness crisis.

The 12 abstaining E.U. countries included Austria, Sweden and Spain, according to a European diplomat.

Carlos Cuerpo, Spain’s economy minister, in a letter sent on Thursday to Valdis Dombrovskis, the European Commission’s trade commissioner, called on the commission to continue negotiations with China. He wrote that the European Union needed to protect its automotive industry while avoiding an escalation of tensions with major trading partners like China, according to a European official who had seen a copy of the letter.

Others argue the tariffs will encourage the Chinese companies to shift their production to Europe, creating jobs and bringing their expertise to the continent. Two Chinese companies, Chery and Leapmotor, have already set up joint ventures with automakers in Europe, and BYD, China’s leading automaker, is building its first factory in Europe.

But leaning too heavily on China to help prop up European industrial production could prove counterproductive in the long run, said Janka Oertel, the director of Asia for the European Council on Foreign Relations.

“Reindustrializing with the help of Chinese companies may seem like an easy fix to some in Rome or Madrid, but would further enhance dependence on Beijing and ability to strong-arm the European political process,” she said.

Keith Bradsher contributed reporting from Beijing. John Liu contributed research.