The European Union's plan to impose tariffs on Chinese electric vehicles (EVs) has sparked industry concerns, with critics labeling the anti-subsidy measures as protectionism disguised as "fair trade" promotion.

Opponents argue that the EU should embrace competition rather than shield its domestic EV industry with trade barriers such as anti-subsidy measures.

The European Commission released a draft decision on Aug. 20, 2024, proposing to impose definitive countervailing duties on EV imports from China, ranging from 17% to 36.3% (with a separate rate of 9% for Tesla). The proposal is currently awaiting approval from EU member states.

This move aligns with the EU's broader strategy to gain a competitive edge in the global green transition. In recent years, the EU has prioritized the development of the "new trio" — electric vehicles, lithium-ion batteries, and photovoltaic products.

Since the introduction of the European Green Deal in 2019, the EU has intensified its focus to the green energy transition, vigorously promoting new energy industries. The "A New Industrial Strategy for Europe" released in 2020 by the European Commission outlined plans for investment and financial support to drive this green shift. These efforts have led to numerous industrial subsidy policies.

The EU also launched the European Battery Alliance and issued the Strategic Action Plan on Batteries to support the growth of its lithium-ion battery and EV industries. Additionally, it has implemented the Solar Energy Strategy and created the European Solar PV Industry Alliance.

According to data from the European Commission, between 2018 and August 2024, the commission approved a total of 36.2 billion euros ($40.5 billion) in state aid under the "Important Projects of Common European Interest (IPCEIs)" initiative. This funding supported 320 projects in areas such as batteries, hydrogen, microelectronics, communication technologies, and next-generation cloud infrastructure and services. The battery industry alone received approval for 68 projects, which accounted for about 21% of the total, with subsidies totaling 6.1 billion euros, or roughly 17% of the overall funding.

The EU's use of energy industry subsidies has deep historical roots, dating back to the early days of European economic integration. For example, the Treaty establishing the European Coal and Steel Community, signed in 1951 by six European countries (France, West Germany, Italy, Belgium, the Netherlands and Luxembourg), marked an early step in this direction. Following the formation of the EU, the development of new energy and renewable energy became strategic priorities.

While the EU heavily subsidizes the "new trio" domestically, it has simultaneously imposed discriminatory countervailing measures abroad. Following the European Commission's draft decision to impose definitive countervailing duties on Chinese EV imports, a spokesperson for China's Ministry of Commerce criticized the investigation as being predetermined.

The spokesperson argued that the EU's actions at every stage of the investigation violated the principles of objectivity, fairness, non-discrimination and transparency that the EU had committed to, contravening World Trade Organization rules. This, the spokesperson claimed, was a case of "unfair competition" masquerading as "fair competition."

Many European companies have also voiced concerns about the potential negative impact of tariffs on Chinese EVs. They argue that such measures could increase costs for low- and middle-income consumers and undermine the EU's efforts to promote its green transition.

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