Employees work on a new energy vehicle production line at Huai’an Biadi Industry Co., Ltd. in Huai’an, Jiangsu Province, China, on August 26, 2024.
Zhao Qirui | VCG | Visual China Group | Getty Images
The European Union has decided to raise tariffs on Chinese-made electric cars to up to 45.3% at the end of the most high-profile investigation that has divided Europe and prompted retaliation from Beijing.
Just over a year after launching its anti-subsidy investigation, the European Commission has imposed additional tariffs on top of the EU’s standard 10% car import duties, ranging from 7.8% for Tesla to 35.3% for China’s SAIC We are planning to set tariffs.
A senior EU official said the additional tariffs were formally approved on Tuesday. The new interest rates are expected to be published in the EU’s Official Journal later that day or on Wednesday. It will take effect from the next day.
The European Commission, which oversees EU trade policy, said the tariffs were needed to counter unfair subsidies such as below-market prices for land, batteries and raw materials, as well as preferential loans and subsidies.
According to the report, China has surplus EV production capacity of 3 million units a year, twice the amount of the EU market. Given the 100% tariffs in the US and Canada, the most obvious destination for these EVs is Europe.
The Chinese government claims that EU tariffs are protectionist and are having a negative impact on EU-China relations and automotive supply chains, and in apparent retaliation this year it has cut back on EU brandy, dairy and pork products. We have launched our own investigation into the import.
It also objected to the EU’s interim measures at the World Trade Organization.
European automakers are struggling with an influx of low-cost EVs from Chinese rivals. The commission estimates that the share of Chinese brands in the EU market will rise from less than 1% in 2019 to 8% and could reach 15% by 2025. Prices are typically 20% lower than EU-made models.
The EU’s stance towards China has hardened over the past five years. EU member states are not united on EV tariffs, although they see China not only as a potential partner in some areas but also as a competitor and institutional rival.
Germany, the EU’s largest economy and car producer, voted against the tariffs in a vote earlier this month, with 10 EU member states supporting them, five against and 12 abstaining.
German carmakers have strongly criticized the EU’s measures, recognizing that a potential hike in import duties from China on large-engine gasoline cars would be the biggest blow.
The move comes as thousands of German industrial workers, including those at car manufacturers, are on strike for higher wages. volkswagen The company is probably about to announce the closure of a domestic factory for the first time in its 87-year history.
Hungarian Prime Minister Viktor Orbán said the EU was headed for an “economic cold war” with China.
However, France’s PFA automobile association welcomed the tariffs, adding that it supports free trade as long as it is fair.
The commission has held eight rounds of technical negotiations with China to find alternatives to tariffs, and said negotiations can continue even after tariffs are imposed.
Both countries are considering the possibility of a minimum price promise for imported cars and agreed to hold a further round on Friday, but the committee said “significant gaps remain”.
It remains to be seen how the tariffs will affect consumer prices. Some producers may be able to absorb them at least partially.
According to data from the China Passenger Vehicle Association, China’s EV exports to the EU fell 7% year-on-year in the first nine months of 2024, but jumped by more than a third in August and September ahead of the tariffs. (CPCA) show.
