China-EU EV tariff showdown

Decoding transatlantic relations with Beijing.
By STUART LAU
with PHELIM KINE
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WELCOME. This is Stuart Lau reporting in Brussels. Phelim Kine will have the full U.S.-China dossier on Thursday.
ONE LAST PUSH: Chinese Commerce Minister Wang Wentao has the unenviable task this week of trying to talk the European Union out of imposing tariffs on made-in-China electric vehicles. The stakes will be high for Wang when he sits down with EU Trade Commissioner Valdis Dombrovskis in Brussels on Thursday. The negotiations come just days before representatives of EU countries will take a formal vote, on Sept. 25, to decide whether to sustain the tariffs over the next five years.
Waiting for new proposals: So far, remedial proposals put forward by Beijing have all been shot down by the European Commission, the EU’s powerful executive. EU officials say they will wait to see what Beijing could come up with during the talks — while they’re also mindful of reaching any deals that would make it easier for Chinese products to dominate the EU market, like the EU trade deal with China on solar panels a decade ago.
Divide and (still difficult to) conquer: As is often the case, when Brussels won’t budge, try the individual EU countries. And there are 27 to play with. Last week, Beijing scored a PR win when visiting Spanish Prime Minister Pedro Sánchez urged the EU to “reconsider” these EV tariffs — and also overturning Madrid’s own support for these measures amid what the EU considers to be “overcapacity” on the part of the Chinese state subsidies.
However, Wang’s pre-Brussels talks were less successful.
Rome’s unfazed: Italian Foreign Minister Antonio Tajani on Monday told Wang in Rome that his government supports the EU’s measures against Chinese subsidies for its EV industry.
“I reiterated to the minister Italy’s willingness to collaborate with this great country that is an interlocutor but also a competitor on international markets,” Tajani told press agency ANSA after hosting Wang at his ministry. “I reiterated Italy’s position regarding duties on cars; we support the EU’s position.”
Not just there for the Colosseum: Wang chose Italy for a reason. If Spain does indeed flip on its decision, it would be a win for the EU’s most vocal opponent of the duties, Germany. But that’s not enough: Berlin needs another large EU country in its camp, such as Italy or Poland, my colleague Koen Verhelst writes.
Both Spain and Italy are interested in courting Chinese battery and EV makers to invest in their economies. Both have a history of car production and are now eager to make the switch to electric models. For China, Poland could be a much tougher one to crack: It relies on the U.S. as its main security guarantor against Russia’s threats.
More to watch today: Before he arrives in Brussels, Wang will first make an appearance in Berlin today. He’s due to speak with Economy Minister Robert Habeck of the Green Party, which sees China as a competitor and threat. But the ultimate decision-maker, Chancellor Olaf Scholz of the socialist family (like Spain’s Sánchez), takes a much softer line on China, having vocally opposed the duties. Habeck and Wang will be meeting just after noon, Berlin time.
CHINA SENDS WARNING TO CAR-MAKERS:  China’s commerce ministry warned Chinese carmakers of the risks of making auto-related investments overseas at a recent meeting, Reuters reports. It “strongly advised” against investing in Russia and Turkey, while it used a “more gentle tone” to highlight risks in building factories in Europe.
DER STRAIT CROSSING: Two German warships sailed through the Taiwan Strait on Friday in the country’s first transit of the disputed waters in more than two decades. The ships were traveling from South Korea to the Philippines, while the strait passage had been publicized in a widely-telegraphed move before it happened.
“The signal is a very simple one, which we have always maintained and I have always maintained,” German Defense Minister Boris Pistorius told reporters in Berlin. “International waters are international waters.”
Cross-strait watching: Taiwan’s Defense Ministry confirmed the frigate Baden-Wuerttemberg and support ship Frankfurt am Main had transited through the strait from north to south, adding that throughout the sailing “the situation remained normal.” In Beijing, Chinese Foreign Ministry spokesperson Mao Ning said “we firmly oppose provocations endangering China’s sovereignty and security in the name of freedom of navigation.”
Tougher than before: The last German naval deployment in Asia-Pacific, in 2021-22, was during former Chancellor Angela Merkel‘s time. On that occasion, the frigate avoided the Taiwan Strait, while Beijing also turned down its request for a port call in Shanghai.
CLAMPING DOWN ON CLIMATE SCAM: The German Federal Environment Agency has stopped a total of 45 climate projects with China, as there’s a “very strong suspicion of fraud” on the part of the German companies applying for these financial credits. “Our goal is to unwind all 45 suspicious China projects,” the head of the agency, Dirk Messner, said at a press conference. Der Spiegel has more.
CHINA MAKES ‘ILLICIT DRUG PRODUCER’ LIST: China landed on the Biden administration’s “Major Drug Transit or Major Illicit Drug Producing Countries for Fiscal Year 2025” list released Monday. The White House noted Beijing’s recent efforts to address Chinese chemical exporters’ role in the U.S. opioid overdose epidemic, but urged Beijing to do more. “Sustained enforcement and regulatory action will be necessary to significantly reduce the PRC’s role as a source of precursor chemicals used in the production, sale, and trafficking of illicit synthetic drugs significantly impacting the United States,” the statement said.
That echoes Senate majority leader Chuck Schumer’s letter to Secretary of State Antony Blinken published Friday. “Sustained diplomatic and economic pressure … remains an utmost necessity to hold the PRC further accountable in addressing this crisis,” Schumer said in the letter. Schumer wants Beijing to take more law enforcement action against China’s precursor exporters and the “money laundering and underground banks” that secure profits from the illicit trade. The Chinese embassy declined to comment.
WHITE HOUSE TACKLES TARIFF LOOPHOLE: The Biden administration announced a new tariff action on Friday aimed primarily at China to address a supposed loophole that critics accuse of causing a flood of fast-fashion goods, fentanyl and other small shipments that are exempt from duties and escape customs scrutiny when entering the U.S. market. Senior officials said they are launching a new regulatory process to remove de minimis treatment on imports subject to Section 301, Section 201 and Section 232 tariffs, most of which were imposed on Chinese goods during the Trump administration, POLITICO’s Ari Hawkins reported Friday (for U.S. pros!)  The White House action is an implicit rebuke of House Speaker Mike Johnson’s failure to push through bipartisan rules targeting de minimis during last week’s so-called “China Week” of Beijing-targeted legislation. “Congress must urgently make de minimis reform law,” House Select Committee on China chair John Moolenaar (R-Mich.) said in a statement Friday.
BEIJING FREES ‘WRONGFULLY DETAINED’ US CITIZEN:  The Chinese government has released 68-year-old California resident David Lin, who has been behind bars since 2006 serving a life sentence for what the U.S. government says are bogus charges of contract fraud. Lin arrived back in the U.S. on Sunday. The release of Lin —one of three Americans, along with Mark Swidan and Kai Li, that the State Department considers “wrongfully detained” in China —marks a breakthrough in a bilateral irritant that has defied resolution for years. Phelim has the full story here.
USTR FINALIZES CHINA 301 TARIFFS: The Biden administration on Friday said its plan to quadruple tariffs on Chinese electric vehicles to slightly more than 100 percent will take effect Sept. 27 and that a proposed increase for tariffs on ship-to-shore cranes used to load and unload goods would be modified to exclude cranes ordered before May 14. The Office of the U.S. Trade Representative also made some other modifications to proposed increases on about $18 billion worth of Chinese goods, which were originally announced in May. POLITICO’S Doug Palmer has the full story here (for U.S. pros).
The decision drew fire from the U.S. China Business Council’s president Craig Allen, who said in a statement Friday that the tariffs won’t change China’s harmful trade practices but will instead “harm U.S. businesses, consumers, and the overall economy.” The Chinese embassy also protested those tariffs. The tariff decision “reflects the hegemonic nature of U.S. power politics … we strongly urge the U.S. side to correct its policy of containing, smearing and winning against China, immediately lift all additional tariffs on China,” said embassy spokesperson Liu Pengyu.
TAIWAN LAWMAKERS JOIN UN RALLY: Three visiting Taiwanese lawmakers joined a rally in New York City on Saturday urging the United Nations to lift a ban on the self-governing island’s UN participation. Legislators Wu Chuncheng, Ngalim Tiunn and Wu Tsung Hsien joined around 500 supporters of Taiwan’s UN participation organized by Taiwan’s diplomatic outpost in the city,  the outpost said on Facebook on Saturday. 
JIMMY LAI GETS K STREET MASS: Imprisoned former Hong Kong media tycoon and pro-democracy activist Jimmy Lai had a Catholic mass in his honor at Washington’s Catholic Information Center on K Street on Sunday. The service —organized by a former senior executive at Lai’s now-shuttered flagship Hong Kong newspaper, Mark Simon, and director of the nonprofit Michigan-China Economic and Security Review Group, Joseph Cella, in cooperation with the Free Jimmy Lai campaign —drew more than two dozen attendees. Lai has been behind bars since 2020 on charges that United Nations’ legal experts have called a political vendetta “directly related to his criticism of the Chinese Government.” The mass occurred in the run-up to a Senate Foreign Relations Committee press event on Wednesday focusing on Lai’s “wrongful imprisonment” that will include comments by Sebastian Lai, son of the jailed Lai.
The Book: The Chinese Phantom.
The Authors: Christoph Giesen, Beijing correspondent for German magazine Der Spiegel, Philipp Grüll, editor at Bayerischer Rundfunk broadcaster, Frederik Obermaier and Bastian Obermayer, investigative journalists and founders of Paper Trail Media.
Responses have been edited for length and clarity.
What is the most important takeaway from your book?
For more than two decade, the Chinese businessperson Li Fangwei, also known as Karl Lee, helped the Iranian regime to make its missiles more precise, allowing them to reach a longer range. And the United States has not been able to catch him, despite putting the same bounty — $5 million— on his head as they did on Joaquín ‘El Chapo’ Guzmán, the notorious leader of the Mexican Sinaloa cartel, or on al-Qaeda leader Osama bin Laden after he carried out bomb attacks in Dar es Salaam and Nairobi in 1998. The elusive Lee may be one of the most wanted men in the world, but most people have never heard of him. This book aims to change that.
What was the most surprising thing you learnt while writing this book?
Hillary Clinton, Condoleeza Rice, evenU.S. President Barack Obama tried to stop Lee’s activities. However, whenever one of Lee’s companies was sanctioned, he quickly founded a new entity in China. His twists and turns can be traced in the Chinese commercial register. It was game of whack-a-mole that he’d won for years.
Your reporting began in 2018. How current is your book?
When we started investigating Lee six years ago, the threat posed by Iranian missiles was still very theoretical. Today, this danger has increased dramatically: Tehran has used ballistic missiles against Israel, and just a few days ago, it became known that Iran has delivered missiles to Russia, which will most likely be used in the war against Ukraine.
BLOOMBERG: China’s grip on rare earths undercuts projects from US to Japan.
FT: More Chinese women graduate but jobs and equal pay still elude them.
NEW YORK TIMES: In Linda Sun’s case, signs of a familiar China playbook.
MANY THANKS: To editor Paul Dallison, reporters Koen Verhelst, Ari Hawkins, Doug Palmer and producer Max Fahler.
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