The EU is considering increasing import taxes on Chinese electric vehicles to protect the domestic industry, but this risks a trade war.

The European Union is facing a delicate challenge. It plans to increase taxes on Chinese electric cars to protect European industry, but wants to avoid a trade war with China similar to the one between Washington and Beijing, reports the news agency AFP.

Europe’s automotive sector is the crown jewel of its industry, with iconic brands from Mercedes to Ferrari. But the sector is facing the end of combustion engines and China’s lead in the transition to electric cars.

When Brussels launched an investigation into Chinese subsidies for electric cars last year, officials said they wanted to stop “unfair practices” that were undermining European carmakers.

According to AFP, the European Union has until July 4 to increase provisional import tariffs on Chinese electric vehicles, which currently stand at ten percent. Experts expect an increase to 20 to 30 percent. Such measures are intended to deter Chinese exporters, but not to stop them completely.

According to the news agency’s report, American tariffs on Chinese electric cars have even quadrupled to 100 percent. Ursula von der Leyen, President of the European Commission, stressed that the EU is planning a “targeted” action.

However, the EU must balance its concerns about Chinese imports against its climate goals. It wants more Europeans to drive electric cars while banning the sale of new fossil fuel cars from 2035.

However, according to AFP, there is disagreement among the member states within the alliance. Paris, for example, is pushing for the investigation and is supported by French car manufacturers. Germany and Sweden, on the other hand, have expressed reservations.

Beijing reacted angrily to the investigation and launched an anti-dumping investigation into brandy imported from the EU in January as a possible retaliatory measure. According to reports in the state-owned tabloid Global Times, cited by AFP, China may also target pork imports as a countermeasure.

The EU must make a final decision on the tariffs by November.