Chinese electric cars are accelerating, offering well-priced vehicles that often outperform their Western rivals. BYD’s Dolphin model costs just over £10,000 and the Seal EV sells for around $24,000 — well below the cost of US and European-made EVs. Chinese models come equipped with advanced features such as autonomous driving and superior entertainment systems.

Western policymakers agree that this Chinese challenge threatens their own industries – but disagree on how to meet it.

For the US, Chinese EVs are central to the broad tech and trade competition initiated under the Trump administration, and which has remained a central feature of President Joseph Biden’s policies. The Biden administration has imposed a 100% tariff on Chinese-made EVs. Although the US frames the move as a necessary countermeasure to China’s “unfair subsidies” and says it conforms to international trade law, critics fear it undermines established dispute mechanisms.

In addition to potentially damaging the global trade system, US EV tariffs could boomerang, raising the prices of Chinese-made EVs in the US and limiting the number of affordable available vehicles. The US automotive industry is struggling to come up with its own cheap EVs.

Across the Atlantic, Europe is adopting a calibrated approach. After an official anti-subsidy investigation, the EU has announced provisional tariffs of 26-48% on Chinese EV imports. That’s higher than the standard 10% tariff on other non-EU cars.

The decision has revealed a rift. France wants high tariffs, seeking to shield its robust but struggling domestic car industry from cheap Chinese imports. German automakers, with large market shares in China and longstanding partnerships with Chinese firms, worry about a tit-for-tat retaliation.

China has signaled its willingness to retaliate by threatening to raise tariffs on large-engine vehicles from 15% to 25%, a direct threat to BMW, Porsche and Mercedes luxury vehicles. The German car industry has gone from overachiever to underdog, symbolized by Volkswagen’s decision to shed its decades-old job protection scheme. France is focused on protecting domestic jobs and industries, unafraid of Chinese retaliation. Other EU nations are similarly divided.

Despite the Western backlash, China’s EVs look set to gain speed. Beijing’s financial backing allows them to absorb duties and continue their expansion. The tariffs may accelerate China’s strategy of localizing production within Europe. BYD is already building factories in Hungary and Spain.

Another complication is China’s control over critical raw materials needed for EV production, such as gallium and germanium. Both are essential for battery and chip manufacturing. Western EV producers depend on materials coming from a country whose companies are their fiercest rivals.

The irony is that this favors China and could push Brussels closer to Beijing rather than driving them apart. European carmakers such as Renault are already seeking partnerships with Chinese firms to produce affordable EVs. The West’s leading EV producer Tesla, makes many of its vehicles in China for export to Europe and could be caught in the crossfire.

The difference in US and European approaches to Chinese EVs reveals deep strategic divisions. Washington is concerned about maintaining its technological edge and protecting domestic industries. It has embraced protectionism and tariffs to counter China’s rise. Europe remains cautious, recognizing the risks of alienating a major economic partner.

The upshot is dangerous. Divergent positions on both sides of the Atlantic help China sustain its growing dominance in green technologies and its competitive edge. The US moves toward economic decoupling from China in critical sectors, while the EU remains ambivalent, seeking to balance competition with cooperation.

Despite their differences, the US and the EU could get back on the same road. Both share a common concern: about China’s overwhelming dominance in the EV and broad green technology space. As the stakes rise, the EU may need to align with the all-in US policies. A unified transatlantic policy is needed to meet China’s green tech challenge.

Maciej Filip Bukowski is a Fellow for CEPA’s Digital Innovation Initiative. and an Earth System Governance Project Research Fellow. A graduate of the Sorbonne and Cornell law schools, he is completing a Ph.D. thesis on the geopolitics of climate change at Jagiellonian University.

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.

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