Brussels argues that tariffs of up to 45% are necessary to counteract what it calls Beijing’s “harmful” subsidies.

The tariffs, which took effect on Wednesday and will remain in place for five years, follow the EU’s dismissal of China’s accusations that it imposed protectionist measures without evidence of “undue state support” for Chinese vehicles.

These new tariffs add to the EU’s existing 10% tariff on car imports from China. Both sides indicated they would continue discussions, potentially introducing a “minimum price” for Chinese-made cars sold in Europe.

An EU official told the Financial Times (FT) that this minimum price level should be high enough to offset the “damaging subsidies” Chinese manufacturers receive, which allow them to undercut their European competitors.

China’s Ministry of Commerce said on Wednesday that Beijing would “continue to take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises.” The ministry also expressed hope that Brussels could work “constructively” with Beijing to resolve the dispute through dialogue.

The EU’s decision to impose additional tariffs on Chinese-made electric vehicles follows a months-long investigation initiated last year by European Commission President Ursula von der Leyen into alleged unfair support for China’s electric vehicle industry.

Beijing has repeatedly criticized Brussels for the investigation and tariff hikes, arguing that Europe’s actions violate international trade rules and jeopardize global progress in combating climate change.

The tariffs have sparked significant division within the EU, with strong opposition from member states including Germany and Hungary. Diplomats warn that EU countries exporting to China are preparing for potential retaliatory measures from Beijing. This move also comes at a sensitive time for the EU car industry, which is already struggling to compete with the growing presence of low-cost Chinese electric vehicles in the bloc.

All major European carmakers, except Renault, have issued profit warnings this year. Volkswagen, Europe’s largest carmaker, plans to close at least three German plants and cut thousands of jobs as part of a cost-reduction strategy.

In addition to high energy costs and strict regulations tied to the EU’s green transition, the industry is grappling with a sharp increase in more affordable Chinese models entering the market.

The Commission emphasized that the tariffs were introduced to ensure a “level playing field” in Europe, rather than to restrict trade with China. The tariffs, first announced in June, vary from 7.8% for Tesla to 35.3% for SAIC, depending on the subsidies each company received from Beijing. China’s BYD and Geely are also affected.

Other manufacturers that cooperate with Brussels by providing required information will face a tariff of 20.7%, while those who do not cooperate will be subject to a 35.3% duty.

“We can safely say that we fundamentally disagree with every single fact and every single legal argument put forward in the investigation,” an EU official stated.

China has announced it will impose anti-dumping measures on EU spirits imports and has launched investigations into EU pork and dairy imports in response to the EV tariffs.

Beijing also filed a complaint with the World Trade Organization (WTO) following the preliminary tariff announcement, labeling the investigation as “protectionist” and alleging a lack of “concrete evidence” of subsidies in China.

The EU responded that the WTO complaint was now moot, as the tariffs were slightly reduced following the investigation. The Chinese Chamber of Commerce in the EU told the Financial Times it was “deeply disappointed” by the Commission’s decision to uphold tariffs, stating that it was “disheartening that no significant progress has been made in negotiations.”

However, an EU official noted that prices for consumers might not rise immediately: “If a consumer buys a car now, there’s a very good chance they’ll buy it from stock already available in the EU market,” the official said.

A power struggle is unfolding between Europe’s most influential nations and the European Central Bank (ECB) over control of a new monetary tool that both sides fear could destabilize the continent’s banking system if mishandled.

At the heart of this dispute lies the digital euro, a virtual counterpart to euro coins and banknotes, as reported by POLITICO. The ECB has been developing this tool for years, envisioning a pan-European payment system that could rival American giants like Visa and Mastercard.

However, as the project neared implementation, controversy erupted. Certain EU governments, including France and Germany, contend that the ECB wields too much control over an issue of great importance: the amount of digital currency citizens will be permitted to hold in central bank-backed digital “wallets.”

While this may seem like a technical matter, the stakes are substantial. Policymakers and experts fear that if the cap is set too high, citizens could withdraw significant funds from traditional banks during a crisis, threatening the stability of the entire banking system.

Others argue that any restriction could infringe on personal financial freedoms and heighten fears of a “Big Brother” state, according to a diplomat who spoke with POLITICO.

This debate raises a fundamental question: Where does the ECB’s authority end, and that of EU member states begin? Thirty years after the ECB became the bloc’s chief monetary guardian, this dispute calls for a reassessment of the delicate balance between politics and central banking.

For some, it represents a necessary step back from the ECB’s excesses. In Frankfurt, however, officials perceive it as political encroachment into an area where it should not interfere. As one diplomat put it, this issue is about a “power struggle” rather than technical specifics.

Technocracy vs. democracy

Facebook’s 2019 attempt to launch the global cryptocurrency Libra shook the financial world, prompting over 100 central banks to explore the concept of a national digital currency.

While many of these initiatives have since faltered, the ECB remains committed, advocating for the digital euro as a transformative alternative to existing payment systems, aiming to lessen Europe’s dependence on dominant US and non-EU payment services, which currently handle around 70 percent of EU payments.

Yet the ECB’s progress has alarmed key member states, who view the project as overly “technocratic.” In Brussels, these nations are wielding their political influence to curb the ECB’s authority in ongoing negotiations over critical elements of the digital euro’s design.

Under the draft regulation being negotiated by lawmakers and governments, only the ECB would determine how much digital currency citizens can retain in their wallets.

Frankfurt views this as consistent with its vision of the digital euro as a reflection of Europe’s monetary sovereignty. Moreover, officials familiar with the discussions point out that the central bank is the sole authority permitted to adjust the money supply.

Germany, France, and the Netherlands oppose the initiative

At least nine countries disagree. Earlier this year, a group including Germany, France, and the Netherlands argued that Frankfurt’s exclusive monetary mandate should not be used to “limit their decision-making power,” according to meeting notes shared with POLITICO.

Diplomats also asserted “political supremacy” over the matter, emphasizing that the digital euro is not merely a monetary tool but a broader financial services issue that could reshape how Europeans make daily payments.

The EU treaty grants the ECB strong legal authority over money supply regulation, but only “qualified prerogatives” over banking supervision and payments.

The EU also explicitly allows the European Council and European Parliament to “take necessary measures for the use of the euro as the single currency” “without prejudice to the powers of the ECB.”

How will the ECB set the ‘holding cap’?

Some member states are also concerned about the affordability of a project designed by technocrats.

“You can create something in an ivory tower, but can it really be used in the market?” asked one Brussels-based executive familiar with the discussions.

Another concern is that allowing the ECB to set the cap would grant it exclusive control over a new tool with significant implications for banking stability.

The ECB argues that maintaining bank soundness is an essential part of its supervisory role, as banks are the main channel through which monetary policy is implemented.

However, many member states remain unconvinced. They argue that prudential responsibilities should be legislated and contend that protecting banks is part of their “patriotic duty.”

Concerns over ‘political pressure’ on the economy

Frankfurt, supported by the European Commission, warns that allowing governments to set the cap could subject the “independent” central bank to political pressure, according to sources familiar with the discussions.

Another European official fears that politicians could harm banks by yielding to public demands to raise the cap.

Ironically, many bankers are now siding with the ECB after it introduced several features aimed at mitigating risks to their business.

Yet member states have not backed down. One possible compromise is to let legislators set parameters within which the ECB would operate, while leaving the final decision to the bank.

Still, this approach may not guarantee the project’s success in reducing Europe’s reliance on the “overwhelming economic dominance” of US technology.

Ultimately, this initiative could become a liability if the ECB proceeds without adequate “democratic support.”

The 56 nations of the Commonwealth have agreed to initiate a formal debate on reparations for the slave trade and other colonial injustices during their summit (CHOGM) held in Samoa this Saturday.

The Commonwealth Heads of Government Meeting (CHOGM) takes place every two years, with each of the Commonwealth’s 56 member states rotating as host. This year’s summit began on Monday in Samoa’s capital, Apia, and concluded on Saturday. The previous CHOGM was hosted by Rwanda in 2022.

Representatives from all 56 countries, most of which were part of the British Empire, attended the summit. However, some leaders, including Indian Prime Minister Narendra Modi and South African President Cyril Ramaphosa, opted to attend the BRICS summit in Russia instead. India’s Minister for Parliamentary Affairs, Kiren Rijiju, attended CHOGM in Modi’s place.

Climate change on the agenda

Climate change was a central topic at this year’s summit, with leaders working on the Commonwealth Ocean Declaration aimed at protecting global water bodies. Countries also discussed commitments to meeting climate finance targets.

According to the final declaration, “most member states” share “common historical experiences” of the “abhorrent” transatlantic slave trade and slavery itself, which had “lasting effects” on the populations involved.

The document also condemned “blackbirding”—the kidnapping of indigenous people from South Pacific islands to labor under British colonial rule, as seen in places like Fiji, Samoa, and Australia.

The declaration noted that Commonwealth leaders heard “calls for restorative justice discussions” related to the slave trade and agreed it was “time for a serious, realistic, and respectful conversation” about building “a shared future based on equality.” It emphasizes that the leaders will actively support these discussions.

British government resists calls for reparations

The Commonwealth leaders’ decision went against the position of the British government, which had declared that compensation should not be included in the final declaration.

Shortly before the summit, British Prime Minister Keir Starmer had announced that compensation would be excluded from the meeting’s agenda. However, speaking after the summit, Starmer acknowledged the “need for discussions” on the topic, while clarifying that “none of the discussions are about money” and that Britain’s position was “very clear” on this issue.

A government spokesperson reiterated Britain’s stance against reparations, including “non-financial” forms of “restorative justice,” stating that the UK would not accept any form of compensation.

The Starmer government ultimately prevented a separate declaration on restorative justice, which some Commonwealth nations had advocated.

Supporters of restorative justice argue it could take various forms, including educational programs, debt relief, and other forms of economic support.

King Charles III and Starmer address the issue

King Charles III sought to soften the British stance, acknowledging Britain’s “painful history” and emphasizing that while “no one can change the past,” there is always the potential to “learn from it” to guide the future.

Prime Minister Starmer also emphasized the importance of assisting Commonwealth nations in accessing climate finance, while affirming that the summit’s priority was addressing climate resilience.

British academic Michael Banner, Principal of Trinity College, Cambridge, has estimated that Britain’s historical debt to the Caribbean due to the slave trade alone could exceed £200 billion.

Asked about the shape of post-summit discussions, outgoing Commonwealth Secretary-General Patricia Scotland remarked that the Commonwealth would address the issue with the same careful approach it uses for other sensitive matters.

Caribbean nations propose a reparations plan

Caribbean leaders proposed a 10-point reparations plan during the summit, seeking to include a separate section on restorative justice in the final communiqué. The plan, advocated by Caricom—a coalition of 21 Caribbean nations—included calls for a formal apology, debt cancellation, technology transfers, support for public health initiatives, and the eradication of illiteracy.

Bahamian Prime Minister Philip Davis voiced strong support, stating that it was time for the Commonwealth to seek “justice” for the brutal legacy of slavery.

The legacy of the British slave trade

For over three centuries, between the 15th and 19th centuries, the British Empire was heavily involved in the slave trade. At least 12.5 million Africans were kidnapped and forced onto European and American ships, transported across the Atlantic, and sold as slaves in the Americas.

According to the British Parliament website, Britain’s involvement began in 1562, and by the 1730s, it was the largest slave-trading nation. British ships carried over three million Africans, primarily to Britain’s North American and Caribbean colonies.