Europe risks trade war with China by hiking tariffs on its electric cars

London CNN —

The European Union has hiked tariffs on electric cars imported from China, drawing a rebuke from Beijing, which sees the bloc as a vital and growing market for its auto industry.

Additionaltariffs of between 17.4% and 38.1% will be applied on top of the existing EU duty of 10%, according to a statement from the European Commission. That takes the highest overall rate to close to 50%.

The provisional decision follows an investigation into China’s state support for electric vehicle makers. The European Commission, the EU’s executive arm, launched the probe in October to establish whether Chinese EV prices are artificially low because of subsidies and so hurtEuropean carmakers.

The Commission said its investigation had provisionally concluded that the EV industry in China “benefits from unfair subsidization, which is causing a threat of economic injury.”

The sharp increase in tariffs highlights the more protective stance on trade with China that Brussels and Washington are adopting.Western officials are concerned that jobs and strategically important industries could be wiped out by cheap Chinese imports. The EU is also probing China’s support for wind turbine companies and solar panel suppliers.

But the bloc has to strike a balance between protecting its industry and delivering on commitments to green its economy, which include a ban on the sale of new gasoline and diesel cars from 2035.

“The EU’s green transition cannot be based on unfair imports at the expense of EU industry,” the Commission said in a statement Wednesday.

Ithas applied differing levels of newduties to three major EV makers. BYD — which jostles with Tesla (TSLA) for position as the world’s biggest seller of battery EVs — has the lowest