EV Photo:VCG

 
The European Union's (EU) punitive tariffs on Chinese battery electric vehicles (EVs) are a mistake, which will do more harm than good, the Brussels-based economic think tank Bruegel said on Wednesday.

The European Commission announced Friday that it passed a vote to impose punitive tariffs on Chinese EVs, sparking criticism from several European countries and auto industries who warn the move could boomerang against the EU's competitiveness.

Though the Commission said it had secured necessary support from member states, 12 EU members abstained from the vote and five voted against the decision.

The punitive tariffs "will harm EU citizens more than help them, and they will actually backfire on the European automotive industry," Bruegel said in a report.

The tariffs will insulate European producers from global competitive pressures and discourage them from developing integrated value chains with Chinese partners.

Furthermore, the tariffs represent another step toward the fragmentation of world trade, which will accrue economic costs and create uncertainties that will not spare the EU.

Trade disputes also tend to have spill-over effects, and such disputes between the EU and China will strain the overall bilateral relations, the report said, noting that it's not too late for the EU to change its mind.