(Bloomberg) -- The European Union should re-examine its plan to impose additional tariffs on Chinese-made electric vehicles, Spanish Prime Minister Pedro Sanchez said during a visit to the Asian nation, underlining simmering EU divisions over the trade measure.
“I have to be blunt and frank with you that we need to reconsider — all of us, not only member states but also the Commission — our position towards this movement,” Sanchez told reporters Wednesday in Kunshan, China, following a four-day trip in which he met with President Xi Jinping.
The Spanish premier’s comments raise the prospect that national leaders could try to muster enough support to block the European Commission’s effort to impose drastic restrictions on Chinese EV imports. Such a move would represent a dramatic reversal for EU trade chiefs in Brussels and their supporters like French President Emmanuel Macron, who have been calling for urgent action to prevent European manufacturers being overwhelmed by state-subsidized competition from China.
If a qualified majority of member states — 15 countries representing at least 65% of the EU’s population — doesn’t block the measures in a binding vote, the European Commission will publish a final regulation on the tariffs by Oct. 30. The duties would then remain in effect for five years.
China and the EU have been locked in a trade dispute after Brussels decided to increase tariffs, which will be imposed in November, on Chinese-made electric vehicles, saying that Chinese companies unfairly benefit from state subsidies and are flooding Europe with excess production. In response, Beijing launched anti-dumping investigations into EU exports of brandy, dairy and pork products.
The EU plans to hit SAIC Motor Corp., Volvo Car AB parent Geely and BYD Co. with duties of 36.3%, 19.3% and 17%, respectively, on top of the 10% tariff that exporters from China are already subject to. Tesla Inc. would face an additional rate of just below 8%, plus the base duty.
Spain, as Europe’s largest pork exporter, is particularly affected by the possibility of a trade war. The country is also the EU’s second largest car-manufacturer and is seeking to attract investments from China to develop its EV industry — part of the reason behind Sanchez’s visit.
“We don’t need another war, in this case a trade war,” Sanchez said. “I think we need to build bridges between the European Union and China, and from Spain what we will do is to be constructive and to try to find a solution, a compromise, between China and the European Commission.”
China has had a long-held strategy of taking advantage of divisions within the EU to advance its own interests. A trip to France by Xi in May for talks and a day of bonhomie with Macron — whose country has been a key supporter of the EV probe — was seen as an effort to sew division within the bloc.
China’s goal is to convince enough European countries that the tariffs are a bad idea so they will oppose or water down the final levies. The hope is that the threat of retaliation generates enough pain in those countries to pressure their governments to persuade the EU to back down.
In their meeting on Monday, Xi told Sanchez he’d like to see ties strengthen, particularly in high-tech and new energy developments, while also signaling his frustration with the EU push-back on Chinese firms.
“We hope Spain will continue to provide a fair, just, safe and non-discriminatory business environment for Chinese companies investing and operating in Spain,” Xi said, according to a readout from the official Xinhua News Agency.
Sanchez, whose government granted asylum to Venezuelan opposition leader Edmundo Gonzalez, said he didn’t discuss that issue with Xi, who has long backed current Venezuela President Nicolas Maduro. Gonzalez fled after Venezuelan authorities declared Maduro the winner of elections in July, cracked down on opponents and ordered the opposition leader’s arrest.
Xi was among the first leaders to congratulate Maduro on his reelection, while several European and Latin American nations, as well as the US, have said Gonzalez won the most votes.
Sanchez reiterated that his government wants Venezuela to publish detailed results from Venezuela’s polling stations and has refused to recognize Maduro as the winner of last month’s election.
--With assistance from Thomas Hall.
(Updates with tariff details from the sixth paragraph.)
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