Spain’s PM, Sanchez calls on EU to review China’s EV tariff plan

Spain’s Prime Minister Pedro Sanchez has called on the European Union to “reconsider” a plan to impose tariffs of up to 36% on Chinese electric vehicles, seeking for a “compromise” between the economic superpowers.

The European Commission, which handles the bloc’s trade policy, indicated last month that it intended to impose five-year import taxes of up to 36% on electric vehicles imported from China.

Beijing also stated that it will open an investigation into EU subsidies for various dairy products sold to China.

During his visit, Sanchez spoke with key authorities, including President Xi Jinping, and urged “dialogue and cooperation” with the world’s second largest economy.

The trip comes amid rising trade tensions between the European Union and China, especially over Beijing’s subsidies for the electric vehicle sector.

In June, China launched an anti-dumping investigation into pork imports from the bloc in response to an application submitted by a local trade grouping on behalf of domestic producers.

The Iberian nation is the European Union’s largest exporter of pork products to China, selling more than 560,000 tonnes last year totalling 1.2 billion euros ($1.3 billion), according to industry body Interpore.

Mr. Sanchez on Monday called for Madrid and Beijing to defend what he called a “fair trade order”.

China and the European Union have butted heads in recent years on a range of issues relating to trade, technology and national security.

Brussels has launched a raft of probes targeting Chinese subsidies for solar panels, wind turbines and trains.

But it faces a delicate balancing act as it tries to defend Europe’s crucial auto industry and pivot towards green growth while also averting a showdown with Beijing.

On Wednesday, the president of an EU business lobby in Beijing said overcapacity of Chinese electric vehicles was among the top concerns facing European firms in the country.

The risks of doing business in China are “mounting and the rewards (are) seemingly decreasing”, the EU Chamber of Commerce said in a position paper Wednesday.

It added that “Many investors are now confronted with the reality that the problems they are facing in the China market may be permanent features,” said the Chamber, which drew on the views of the more than 1,700 EU firms operating in the country.

“A substantial strategic rethink” may now be required, it warned.

According to a European Commission official, the EU executive is still “open” to resolving the trade issue without using tariffs, but “it’s very much up to China to come up with alternatives”.

Beijing has already lodged an appeal against the measures with the World Trade Organization, which Brussels has acknowledged while expressing confidence that the levies are WTO-compatible.