European Commission, the executive arm of EU, has announced to impose levies on Chinese solar panel imports. The levies will be published tomorrow in Eurozone’s Official Journal. It will come into full effect on Thursday, June 6. Germany, France and many other European countries have opposed the tariffs, fearing that the move may trigger a trade war between two of the world’s biggest trading partners.

Chinese Solar Panels

Last month, the European Commission called for tariffs between 37.3 percent and 67.9 percent depending on the manufacturer and the products. The average tariff levels will be 47 percent. The tariffs will cover solar panels, poly silicon, solar cells and other main components. But the European Commission said today that the duties will be only about a quarter of the initially planned levels from June 6 to August 6, with the lower rate of 11.8 percent. This move was aimed at easing the dispute and giving Chinese solar panel manufacturers some more time to negotiate a settlement.

Chinese Firms Need To Propose Acceptable Alternative

Initially, the levies will be only for six months, but may be prolonged for five years. The Commission said it is giving Chinese solar panel companies until August 6 to come up with an acceptable alternative to the levies. The final decision will be taken in December when the Eurozone member countries will vote on whether to make the tariffs permanent or not, according to Bloomberg

Chinese solar panel companies have been selling panels at far lower prices in Europe, jeopardizing the future of European solar panel makers. Cheap Chinese solar panels have forced several American companies as well to file for bankruptcy. The tariff will affect 21 billion euros ($27 billion) worth of Made-in-China solar panels sold in the region. European Commission earlier said that China has threatened European countries to retaliate if they back the tariffs. Chinese solar panel makers have occupied 80 percent of the European solar panel market.

Price Main Advantage For Chinese Solar Panel Makers

European Commission wants Chinese solar panel makers to sell above a minimum price in Europe. Price is the main advantage of Chinese products, which China doesn’t want to compromise upon. If Chinese makers fail to reach an agreement, the levies will come into full force from August 6 at originally planned levels of 37.35 percent to 67.9 percent.

The annual trade between EU and China is $653 billion. At the moment, both sides need to keep calm to boost trade, growth and jobs in their respective economies. Europe’s paymaster Germany has openly opposed the tariffs.