Why Spain’s efforts to stop tariffs on Chinese EVs will fall short

“Useless efforts lead to melancholy” – Spanish philosopher Jose Ortega y Gasset’s words from decades ago aptly reflect the current Spanish government’s abrupt attempt to take a more proactive role in shaping the European Union’s China policy. Spanish Prime Minister Pedro Sanchez’s recent visit to Beijing was filled with dulcet overtones. The intent was supposedly straightforward: secure a more robust economic partnership while assuaging Chinese concerns over Spain’s stance on escalating European protectionism. Sanchez is walking a fine line. While advocating for more robust European anti-subsidy duties against Chinese goods, as a means of pushing Beijing towards building more factories in the EU, he had also affirmed openness to closer economic and cultural ties between China, the second-largest economy in the world, and Spain, the fourth-largest economy in Europe. Spain wants Chinese investment to support job creation, infrastructure development and growth in its globally integrated automotive sector. More recently, Sanchez has even called on the EU to rethink its tariff plan and instead adopt “a solution negotiated and agreed in the WTO framework” that “avoids commercial escalation that benefits no one”. Ahead of an upcoming binding vote on European tariffs on Chinese electric vehicles (EVs), his remarks indicate a new-found scepticism towards the escalating barriers to trade. Meanwhile, German Chancellor Olaf Scholz also appears swayed by the economic argument against tariffs. Chinese EVs are far too significant to European consumers for the latter to bear the brunt of the raised costs. Admittedly, the benefits of such tariffs for the European automotive industry and the prospects for more affordable EV pricing have often been omitted in Europe-wide renewable energy policies. With the sluggish consumption rate in the region, a de facto trade war against China is not a tenable economic path. Despite Sanchez’s best efforts, however, Spain has – unsurprisingly – limited influence over how EU states will vote next month. European Commission President Ursula von der Leyen has been adamant in pressing for stiffer tariffs, accelerated de-risking and a general distancing of European economies from China. Any reversal now would jeopardise the commission’s credibility and authority, given the high stakes involved. Reversing the tariffs requires a qualified majority – that is, 15 European countries comprising more than 65 per cent of the EU’s population. An indicative vote taken in July saw 12 states in favour, 11 abstaining and four opposed to the decision. Building a coalition against these tariffs, even with Germany and Spain on board, would be a complex and cumbersome process. Sanchez’s exuberance might seem like a win to China, but it is anything but as it is unlikely to alter the voting outcome. Certainly, it would only further estrange Madrid from the mainstream conversation on Beijing as central and western European states view with suspicion any perceived efforts to divide and conquer. A viable solution would be to pursue more joint ventures between Chinese and European firms rooted in sharing of technologies, talent and revenues, and that leave local manufacturers feeling included in China’s economic vision in the region. While Beijing would welcome a more pragmatic European attitude towards its drive for strategic autonomy, what matters more is that EU states move with coordination and certainty on key priorities. If a reassessment of the rationale for tariffs was genuinely needed, why did Sanchez so forcefully back these tariffs in the first place? His shift in stance has attracted much opprobrium, with critics accusing him of lacking “foreign policy mettle” and the gumption to make tough calls and defend his nation’s interests. Despite being the fourth-largest economy in the EU, Spain represents a mere 5 per cent of all European exports to China and suffers from one of the largest trade deficits in the union. Such disparity highlights Spain’s dependence and disadvantage relative to China within the bargaining process. Structurally, Spain must strengthen its expertise and strategic leadership on China. For instance, Sino-Spanish relations are presently lumped together alongside North America, eastern Europe, the Pacific and other Asian countries in a single directorate-general – an arrangement that reflects a fundamental lack of dedication and focus. China and Asia at large do not receive the attention they warrant from Spain. Contrast this with the specialist China House nested within the US State Department as a separate unit, with the exclusive mandate of addressing the Sino-American strategic competition. Yet all is not lost. As Europe’s second-largest car producer and the world’s eighth-largest exporter, Spain could have used its stance on EV tariffs as a leveraging tool in trade talks with China, aiming to secure concessions and attract greater investment. Chinese renewable energy developer Envision Energy has agreed to build a US$1 billion green hydrogen park in Spain, yet this could have been extended into a more integrated and comprehensive green energy co-development. As a leading pork supplier to China, Spain is keenly aware of the impact of potential weaponisation. In 2023, Spain exported US$1.5 billion worth of pork products to China – 22 per cent of China’s total pork imports – underscoring Spain’s importance to certain segments of the Chinese consumption market. Sanchez would benefit from more seriously taking stock of his country’s economic strengths and weaknesses relative to Beijing and developing a balanced position. Only then could he forge a consensus on capacity-building with sensitivity to national security considerations – in a way that would not alienate both his critics and allies.

Why Spain’s efforts to stop tariffs on Chinese EVs will fall short

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Spain has tried to assuage China’s concerns and worked to repeal European tariffs, but it faces a tall task and deep scepticism

Spain has tried to assuage China’s concerns and worked to repeal European tariffs, but it faces a tall task and deep scepticism