The EU applies additional tariffs of up to 35.3% on Chinese electric vehicles

The EU decided on Tuesday to impose hefty tariffs on Chinese-made electric cars after an anti-subsidy investigation found Beijing’s support for local manufacturers was unfair.

The additional taxes have been controversial, with strong opposition from Germany and Hungary, for fear of provoking China’s ire and sparking a bitter trade war.

Beijing denounced the European Union’s “unfair, non-compliant and unreasonable protectionist practices” during the investigation.

The duties will be on top of the current 10 percent on electric vehicle imports from China, according to a text published online by the European Commission, which heads the EU’s trade policy.

The decision will become law on Wednesday after publication in the EU Official Gazette and the additional rates will then come into effect from Thursday.

The Brussels investigation showed that Chinese state subsidies unfairly undermined European car manufacturers.

Once the rates come into effect, they are final and valid for five years.

The additional duties also apply, at different rates, to vehicles made in China by foreign groups such as Tesla – which carries a rate of 7.8 percent.

Chinese car giant Geely – one of the largest sellers of electric vehicles in the country – will face an additional 18.8 percent excise tax.

– Distressed companies –

The tariffs do not have the support of a majority of the EU’s 27 member states, but in a vote early this month there was not enough opposition to block them – which would have required at least 15 states representing 65 percent of the EU’s population block represented.

The EU launched the investigation in an effort to protect its car industry, a key industrial player that provides jobs to around 14 million people.

But Europe’s bigger carmakers, including German car giant Volkswagen, have criticized the EU’s approach and urged Brussels to resolve the issue through talks.

Volkswagen, which has been hit hard by increasing competition in China, said the tariffs would not improve the competitive position of the European car industry.

That warning came weeks before the ailing giant announced plans on Monday to close at least three factories in Germany and cut tens of thousands of jobs.

Talks between the two sides continue and duties could be lifted if they reach a satisfactory agreement, but Chinese and European officials have pointed to gaps and disagreements.

– Retaliation –

The EU now faces China’s wrath and possible retaliation. China said on October 8 it would impose provisional tariffs on cognac imported from the EU.

Beijing has also been investigating EU subsidies for certain dairy and pork products imported into China.

Trade tensions between China and the EU are not limited to electric cars, with Brussels also investigating Chinese subsidies for solar panels and wind turbines.

The EU is not alone in imposing high tariffs on Chinese electric cars.

Canada and the United States have imposed much higher tariffs of 100 percent on Chinese imports of electric cars in recent months.

raz/gv