EU votes in favor of huge tariffs on Chinese electric cars, but Germany

German automakers including Mercedes and BMW speak out against new tariffs on Chinese electric cars

European Union member states voted in favor of imposing new tariffs on Chinese-made electric vehicles, although negotiations between EU and Chinese officials are expected to continue. Despite the vote, discussions between the two sides could affect the final outcome of these tariffs.

Late last week, 10 EU member states supported the proposed tariff increase, five voted against it and 12 chose to abstain. The only way to overturn a tariff increase is if a qualified majority – the 15 EU member states representing 65% of the bloc’s population – vote against it. This procedural rule ensures that any major decisions receive strong support from member states and proportions of the population.

Read: Xpeng Motors may start making electric cars in Europe to avoid tariffs

The European Commission has confirmed that it will continue negotiations with Beijing, with a possible compromise being to set a minimum sales price for Chinese electric vehicles in Europe. Noah Barkin, a senior adviser at Rhodium Group, expressed doubts about a deal, especially since China launched investigations into EU brandy, dairy and pork products in what was widely seen as a retaliatory measure.

Germany, Europe’s largest economy, voted against raising tariffs. German carmakers face countermeasures from China, with many expressing concerns about a tit-for-tat trade war ahead of the vote.

“Today’s vote is a fatal signal for the European automotive industry,” BMW Chief Executive Officer Oliver Zipse said. “What is needed now is a quick solution between the European Commission and China to prevent a trade conflict that would not be good for anyone. The fact that Germany voted against the tariffs is an important signal and increases the chances of a negotiated solution.”

Mercedes-Benz calls the tariffs a “mistake” and wants the European Commission to delay implementation so negotiations can continue. Reuters pointed out that Volkswagen also opposed raising tariffs to 45% and called on officials to find a “political solution.” The company said there was still time to reach a deal before tariff changes are implemented at the end of October.

The European Commission pointed out that China has overcapacity of 3 million electric vehicles every year and needs to export all of them. The urgency of the situation is further heightened by the European Commission identifying Europe as the most likely destination for these excess vehicles, as the United States and Canada already impose 100% tariffs.