The European Union (EU) countries have cast their votes in favour of enforcing substantial duties on China-imported electric vehicles (EV), notwithstanding apprehensions voiced by Germany over the possibility of inciting a trade dispute with Beijing. The deliberation of confirming the penalty measures for a duration of five years took place in June, when substantial taxes were tentatively levied on Chinese electric automobiles, with the final approval coming through on Friday.
As a response to an analysis that demonstrated China’s excessive subsidy of its EV industry and consequent dumping of its products in the EU market at lower prices, thereby undercutting European automakers, the tariffs were proposed by the European Commission. The backlash from the extensive tariffs has led to Germany, and recently Spain, voicing their resistance due to fears of potential repercussions faced by their auto industries from China. In meanwhile, Spain urged the EU to engage in discussions with China to seek a mutual resolution that could preclude the need to impose tariffs on Chinese EVs.
The spokesperson for the European Commission, the EU’s executive extension accountable for trade, asserted that the imposition of tariffs was a necessity to restore balance in the EV industry and was not an arbitrary punitive measure. The protective trade countermeasures are set to be enforced from the end of October for a span of five years.
This escalation of tariffs could potentially provoke further retaliatory actions from China, who has recently commenced anti-subsidy investigations into EU’s exported dairy products. Discussions between EU and Chinese officials regarding the proposed EV tariffs have been ongoing and are expected to continue further. The Commission has stated that if China can rectify the benefit garnered from the subsidies for its EV sector, it would consider revoking the tariffs. However, this would most likely require a commitment from companies to maintain a minimum price threshold for imported EVs.
Reacting to these developments, the China Chamber of Commerce to the EU has expressed its intense displeasure, labelling the EU’s actions as protectionist trade measures.
Concerns are growing in Brussels that the cheaper Chinese electric vehicle (EV) imports have been dominating the European Union market in the past few years, challenging the balance in the European electric car segment. The commission’s investigations into anti-subsidy identified numerous instances where the Chinese state was bolstering its local sector. This included underpriced material supply, tax reliefs and preferential interest rate loans to EV manufacturers.
The announced tariffs will affect electric cars imported into the EU that are produced by US or other multinational corporations, but manufactured in Chinese-based factories. The Chinese automotive manufacturer, SAIC, is set to experience tariffs of 35.3 percent, whilst BYD is liable to a 17 percent tariff. An 18.8 percent tariff is to be imposed on Geely, the Chinese parent company of Volvo. Meanwhile, Tesla, Elon Musk’s electric vehicle enterprise, will be confronted by a 7.8 percent tariff on its China-produced EVs exported to the EU.
Further, Chinese electric car manufacturers who failed to comply with the EU’s subsidy investigation will now have to bear tariffs of 35.3 percent. These newly introduced tariffs will come into effect in addition to the existing 10 percent levies on EVs imported into the European Union.