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EU prepares to impose tariffs of up to 45% on Chinese electric cars

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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.

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Operationsplan Deutschland: The debate over ‘planned economy’ in Germany

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As Ukraine fires U.S.-made long-range missiles at Russia for the first time and Russian leader Vladimir Putin updates his country’s nuclear doctrine, European countries are preparing for an all-out war on the continent.

According to a 1,000-page document drawn up by the German armed forces called ‘Operationsplan Deutschland’, Germany will host hundreds of thousands of troops from NATO countries and act as a logistics hub to send huge amounts of military equipment, food and medicine to the front line.

The German military is also instructing businesses and civilians on how to protect key infrastructure and mobilize for national defense in the event of Russia expanding drone flights, espionage and sabotage across Europe.

Businesses have been advised to draw up contingency plans detailing the responsibilities of employees in the event of an emergency, and told to stockpile diesel generators or install wind turbines to ensure energy independence.

More state intervention in the economy under discussion

In this context, state intervention in the economy and in companies is being discussed more intensively.

The German state has far-reaching rights in crisis situations. The energy crisis showed how quickly the state can intervene: At the time, the German government filled gas storage facilities by law, nationalized the gas importer Uniper and supplied floating LNG terminals.

According to Bertram Brossardt, CEO of the Bavarian Business Association, even a “transition to a planned economy” could be possible in an emergency.

This ‘planned economy’ could involve the state issuing food vouchers or even forcing people to work in certain sectors, such as water or transport companies.

Companies could also benefit if they have employees who volunteer for disaster relief, the Federal Agency for Technical Relief (THW) or the fire brigade.

Lieutenant Colonel Jörn Plischke, who conducted the company training in Hamburg, said: “It costs you a few days a year to support this. But in a crisis, you have a direct link to the people who protect people and infrastructure,” he said.

Hamburg: The intersection of civil and military economy

Hamburg, where Lieutenant Colonel Plischke attended the event, is a central hub for the transport of goods and troops.

“If our infrastructure is used for military purposes, the risk of cyber-attacks and sabotage increases significantly,” the mayor of the Hanseatic city, Peter Tschentscher, told the Faz newspaper.

The Hamburg Senate has therefore created additional staff to strengthen civil defense. A third ‘home defense corps’ has been introduced, made up of volunteers who do not fight in the troops but work to ensure protection and security.

Exercises are currently being held in the Hanseatic city with the German armed forces and civilian forces.

According to the report, this exercise, called ‘Red Storm Alpha’, is training in the protection of port facilities.

The next exercise, ‘Red Storm Bravo’, will start soon and will be on a larger scale.

The lessons learnt from these exercises will then be incorporated into the ‘Operationsplan Deutschland’. This plan is intended to be a ‘living document’, constantly evolving and adapting to new information and threats.

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The era of the ‘right-wing majority’ in the European Parliament

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Under Ursula von der Leyen’s second presidency, the European Commission will abandon its previous ‘cordon sanitaire’ policy towards the ‘far right’.

Leyen’s new Commission will include two members from the ‘far right’. Raffaele Fitto of Fratelli d’Italia (Brothers of Italy – FdI), the party of Italian Prime Minister Giorgia Meloni, and Olivér Várhelyi, who is close to Fidesz, the party of Hungarian Prime Minister Viktor Orbán.

Fratelli d’Italia is part of the European Conservatives and Reformists (ECR) group in the EP, while Fidesz is part of the Patriots for Europe (PfE) group, which also includes the French National Rally (RN) and the Austrian Freedom Party (FPÖ).

The conservative European People’s Party (EPP), led by German CSU politician Manfred Weber, has repeatedly cooperated with the ECR in the past legislature and explicitly reserves the right to do so in the future.

The cordon sanitaire against the right is practically non-existent

More recently, it has voted with the PfE and sometimes even with the Europe of Sovereign Nations (ESN), of which the German AfD is a member. The traditional border against the ‘extreme right’ (the so-called ‘security cordon’) is thus continuing to crumble.

The security cordon was systematically relaxed by the EPP in the last legislative period. As early as January 2022, the EPP made it possible for an MEP from the right-wing ECR to be elected as one of the vice-presidents of the EP.

A study by the Greens shows that the European Commission under Ursula von der Leyen has relied on MEPs from the ECR and even the more right-wing ID (Identity and Democracy) group in around 340 votes to secure a majority.

According to the study, these demands often included a reduction in the CO2 price for the car industry or the approval of subsidies for fossil fuels.

With the votes of the EPP, ECR and ID, the EPP also managed to block a motion in April 2024 proposing measures to prevent parliamentary staff from being harassed by MEPs.

So, one small step after another, the security cordon was broken.

Breaking point: European right united against Maduro

In September, one of the first votes of the newly elected EP attracted more attention. The resolution under discussion would have recognised Edmundo González, the defeated candidate in the presidential elections in Venezuela on 28 July 2024, as the real winner of the elections.

The resolution in favour of González was tabled jointly by the EPP and the ECR, in which the party of Italian Prime Minister Giorgia Meloni is the largest group.

The resolution was finally adopted with the votes of Orbán’s Fidez, Le Pen’s National Rally (RN) and PfE, which includes the FPÖ, and the ESN, which includes the AfD.

The ‘Venezuelan majority’ at work in the EP: EPP support for the AfD

The so-called ‘Venezuelan majority’ – the large voting majority of conservative and right-wing parties in the EP – has since come into play on several occasions.

This was the case in October, for example, when the European Parliament decided on the procedure for presenting and voting on future EU commissioners. Also in October, the EPP voted in favour of an AfD budget motion proposing the erection of extensive barriers at the EU’s external borders.

The EPP, ECR and PfE also voted to award this year’s European Parliament Sakharov Prize to González and right-wing Venezuelan opposition politician María Corina Machado.

Finally, last week the EPP joined with other MEPs on the right to amend a bill aimed at halting global deforestation.

Sparking outrage on the left, several rebel MEPs from the ECR, PfE, ESN and the liberal Renew group backed the EPP on key amendments.

European Commission President Ursula von der Leyen was elected in July on the basis of an alliance between the EPP, Liberals, Socialists and Greens.

In its second term, the European Commission is abandoning its previous ‘cordon sanitaire’ policy against the ‘far right’.

Leyen’s new Commission will include two members from the ‘far right’. Raffaele Fitto of Fratelli d’Italia (Brothers of Italy – FdI), the party of Italian Prime Minister Giorgia Meloni, and Olivér Várhelyi, who is close to Fidesz, the party of Hungarian Prime Minister Viktor Orbán.

Fratelli d’Italia is part of the European Conservatives and Reformists (ECR) group in the EP, while Fidesz is part of the Patriots for Europe (PfE) group, which also includes the French National Rally (RN) and the Austrian Freedom Party (FPÖ).

The conservative European People’s Party (EPP), led by German CSU politician Manfred Weber, has repeatedly cooperated with the ECR in the past legislature and explicitly reserves the right to do so in the future.

New Commissioners from the right

Raffaele Fitto, a member of Giorgia Meloni’s FdI party, is known as one of Meloni’s closest friends and will be appointed by Leyen as one of the vice-presidents of the EU Commission ‘responsible for cohesion and reforms’.

Hungary, on the other hand, has appointed former Enlargement Commissioner Olivér Várhelyi as a commissioner in Brussels, with future responsibility for health. Várhelyi is very close to Prime Minister Orbán’s Fidesz party.

There is strong protest against Fitto and Várhelyi in the Socialist and Green parliamentary groups, which support the Leyen Commission. It is rumoured that both groups will not support the appointment of the two politicians.

The invisible architect of the right-wing alliance: Manfred Weber of the CSU

The row over future commissioners has come to a head in recent days.

EPP President Manfred Weber (CSU), who is seen as the main architect of his group’s alliance with the ECR and the EPP, could theoretically get two right-wing commissioners approved with a “Venezuelan majority”.

However, if CDU or CSU politicians in the EP vote with the AfD on a key decision, this could be seen as an unwelcome signal shortly before the early German elections.

But as former Italian prime ministers Romano Prodi and Mario Monti said on Tuesday, pressure is growing for the EU to act ‘as one’ at a time when it faces ‘major challenges both in the East and in the West’.

We have a responsibility to make sure that something changes after this election… The majority will very often include the ECR,” German EPP MEP Peter Liese of the CSU also told reporters on Monday.

Liese said he had no “firewall” against the ECR and claimed that Fitto’s senior position had been negotiated as part of an agreement between the main political families in the European Council at the beginning of the summer.

Continued support for Ukraine in return for right-wing MEPs

On Wednesday (20 November), however, the leaders of the European Parliament’s political groups, meeting in Brussels, reached an agreement.

According to this, Fitto and Várhelyi will be allowed to take up the positions in the European Commission that Leyen has envisaged for them, and the Socialists will agree to this.

In return, the EPP promises to cooperate only with ‘pro-Ukrainian’ parties that support the EU and the rule of law.

This means that the old ‘cordon sanitaire’, i.e. the border against the ‘extreme right’, has been replaced primarily by foreign policy conditions.

According to the EPP’s interpretation, there are no longer any obstacles to cooperation with the ECR.

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Turmoil in the SPD: Pistorius vs. Scholz

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Pressure is mounting on German Chancellor Olaf Scholz to relinquish leadership of his party, the Social Democrats (SPD), ahead of the upcoming snap elections. This move is seen as a potential lifeline for the party, currently polling in third place, to regain electoral momentum.

The SPD leadership has thus far supported Scholz’s bid for a second term in the federal elections, now rescheduled for 23 February 2025 following the collapse of the three-party coalition on 6 November. However, internal dissent is growing.

In two heated party meetings last week, SPD MPs deliberated over whether Defence Minister Boris Pistorius should replace Scholz as the party’s candidate. According to Der Spiegel and POLITICO, one meeting included the conservative wing of the SPD, while the other involved its left wing. Both groups reportedly had significant support for replacing Scholz with Pistorius.

Calls for Scholz to step aside reached a crescendo on Monday, with prominent SPD politicians from North Rhine-Westphalia, Germany’s most populous state, leading the charge.

Pistorius’ voices rise within the party

Dirk Wiese and Wiebke Esdar stated: “The focus is on finding the best political line-up for this election. We hear a lot of praise for Boris Pistorius. It is clear that the final decision on the chancellor candidacy will rest with the party committees, as it should.”

Markus Töns, a long-time SPD member, echoed this sentiment in Stern: “The chancellor has done a good job in difficult circumstances, but the coalition’s end signals a need for a fresh start. Boris Pistorius would make this easier than Olaf Scholz.”

Former SPD leader Sigmar Gabriel was even more critical. Writing on X (formerly Twitter), Gabriel warned of “growing resistance” within the SPD to Scholz’s leadership. “The SPD leadership’s only response is appeasement and loyalty pledges. What we need is bold political leadership. Without it, the SPD risks falling below 15 percent,” he cautioned.

Scholz confident of ‘support from the leadership’

The SPD leadership had planned to finalize the chancellor candidacy decision at its party conference on 30 November. However, the timeline may accelerate to quell the escalating debate.

Speaking from the G20 Summit in Brazil, Scholz dismissed questions about his candidacy, expressing confidence in party support. “The SPD and I aim to win this election together,” he told Die Welt. Secretary-General Lars Klingbeil reinforced this stance, stating on ARD television: “We are committed to continuing with Olaf Scholz—there’s no wavering.”

Chancellor returns without stopping in Mexico

Despite these reassurances, Scholz abruptly canceled his planned trip to Mexico, returning to Berlin after the G20 Summit amid rumors of party infighting. While the SPD leadership held a conference call on Tuesday to discuss the campaign strategy, no decisions were reached.

Recent opinion polls paint a bleak picture for both Scholz and the SPD. The party is polling at 16 percent, far behind the CDU and the far-right AfD, marking a steep decline of 10 points since the 2021 elections.

Yet, Boris Pistorius remains Germany’s most popular politician, consistently outpacing CDU leader Friedrich Merz in approval ratings. This has fueled hopes within the SPD that Pistorius could revitalize their electoral prospects.

Pistorius’ rising profile is not without controversy. Known for his hawkish stance on military issues, he advocates for making the German military “fit for war” and has pushed for increased defense spending to meet NATO’s 2 percent of GDP target. Critics argue that these positions clash with the SPD’s traditional skepticism toward military intervention and ties with Moscow.

Nonetheless, many within the SPD believe Pistorius offers the best chance to avoid a crushing defeat in February’s elections. Pistorius has championed investments to rebuild the Bundeswehr after decades of neglect and launched initiatives to recruit for Germany’s depleted armed forces. His restructuring of the army earlier this year emphasized regional defense over external missions.

Internationally, Pistorius’ assertive approach has earned respect from Western allies, positioning him as a strong contender for the chancellorship despite his public denials. “We already have a candidate, and he is the sitting chancellor,” Pistorius recently told German state television.

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