EU imposes tariffs on China solar panels

The European Union has fired the first shot in what threatens to become a trade war with China. The EU has imposed preliminary tariffs on Chinese solar panels - accusing the government of subsidizing its exporters. Germany, Britain and 16 other countries oppose the measure - worried about the impact on jobs and trade.

The preliminary tariffs will last until the start of December this year. If the two side still fail to reach a reconciliation by then, the European Commission will decide on whether to impose a 5-year anti-dumping measure against Chinese solar panels according to a vote by member countries.

The solar panel row between Beijing and Brussels just got hotter.

The European Commission has now officially slapped provisional tariffs on imports of solar panels and parts from China.

Penalties will start at just below 12 percent and rise to above 47 percent in August if a negotiated settlement cannot be reached.

Karel De Gucht, European Trade Commissioner, said, "Our action today is an emergency measure to give life-saving oxygen to a business sector in Europe that is suffering badly from this dumping. Our response is balanced, legal and justified within international trade rules and designed to prevent the situation turning fatal."

The penalties follow allegations that Chinese companies are exporting solar products to Europe at below the cost of production thanks to direct and indirect subsidies.

The German solar firms that launched the probe say they've been vindicated.

Milan Nietzsche, Spokesman of EU Prosun, said, "We can only have fair competition in the solar market if dumping is not allowed and fair competition means a huge variety of competitors not only five companies from China".

But Germany, along with many other EU member states, is calling the move a grave mistake.

And many solar companies say the broader sector will be hit hard.

The only thing all sides agree on right now is that a negotiated solution before the tariffs rise in August would be the best outcome for Europe and China.