EU To Impose Tariffs Up To 38 Percent On Chinese EVs

The European Union is to follow the United States and impose tariffs on certain Chinese electric vehicle (EVs) manufacturers.

The European Commission announced the move on Wednesday, after it “provisionally concluded that the battery electric vehicles (BEV) value chain in China benefits from unfair subsidisation, which is causing a threat of economic injury to EU BEV producers.”

It comes after the Biden Administration and the US Commerce Department last month announced new tariffs on a number of Chinese goods, which they said were designed “to protect American workers and businesses from China’s unfair trade practices.”

US tariffs

The United States implemented tariffs on a range of Chinese imports, including semiconductors, steel and aluminium, batteries, solar cells, medical equipment, and even certain types of cranes.

Included in these new restrictions however was an increase of tariffs for importing Chinese EVs, from 25 percent to 100 percent.

Some felt that Biden’s EV tariffs were largely symbolic as Chinese EVs were already subject to US tariffs imposed by Donald Trump during his presidency.

But the decision by the Biden Administration to raise the tariff to 100 percent ensures Chinese-made EVs are effectively locked out of the US market in the years ahead.

Tesla’s Elon Musk expressed his opposition to the US move, saying he was in favour of no tariffs.

The US tariffs are expected to begin sometime in August 2024.

EU tariffs

Now the European Commission has announced that it would impose extra duties of up to 38.1 percent on imported Chinese electric cars from 4 July 2024.

The Commission said its investigation had provisionally concluded that the battery electric vehicles (BEV) value chain in China benefits from unfair subsidisation. Its investigation also examined the likely consequences and impact of measures on importers, users and consumers of BEVs in the EU.

“Consequently, the Commission has reached out to Chinese authorities to discuss these findings and explore possible ways to resolve the issues identified in a WTO-compatible manner,” the EC said.

The EC said it will impose the following individual duties on three Chinese EV makers, namely:

• BYD: 17.4 percent;
• Geely: 20 percent;
• SAIC: 38.1 percent.

The EC also said that other Chinese EV makers which co-operated in the investigation would be subject to a weighted average duty of 21 percent.

All other BEV producers in China which did not co-operate in the investigation would be subject to the residual duty of 38.1 percent.

And it seems that non-Chinese car companies who produce some EVs in China, including EU and US-based ones will also be impact.

The Commission for example said Tesla may receive an “individually calculated duty rate” because of a specific request it had made.

These charges would come on top of the current rate of 10 percent tariff levied on all electric cars produced in China.

Chinese response

It didn’t take long for China to respond to the EV tariffs.

“This anti-subsidy investigation is a typical case of protectionism,” Chinese foreign ministry spokesperson Lin Jian was quoted by Reuters as saying.

Lin added the tariffs would damage China-EU economic and trade co-operation and the stability of the global car production and supply chain.

Lin said China urged the EU to support free trade, adding Beijing would take all necessary measures to “firmly safeguard” its legitimate rights and interests.

China’s commerce ministry reportedly said it would closely monitor the development and take all necessary measures to safeguard the legitimate rights of Chinese companies.