EU imposes tariffs of up to 38% on Chinese electric cars

The European Union on Thursday imposed additional provisional tariffs of up to 38% on Chinese electric car imports over “unfair” support from Beijing, a move that risks escalating tensions with Beijing. A European Commission investigation launched last year concluded that state subsidies to Chinese electric vehicle makers were unfairly hurting their European rivals – which Brussels wants to protect as they transition from thermal to electric power. The Chinese Chamber of Commerce to the EU criticized the tariffs, which come on top of the current 10% import duties, as “politically motivated” and “protectionist”, but expressed hope that the dispute could still be resolved through dialogue. Europeans are divided on the issue, with Germany and its national auto champions, which do significant trade with China, fearing it could do more harm than good if it leads to a crackdown on EU exports as Beijing has already threatened. German car giant Volkswagen called the move “harmful” while BMW’s boss said the tariff battle was “leading to a deadlock”. France and Italy have pushed for tariffs on Chinese electric vehicles, whose market share in the EU has soared, but both Sweden and Germany have expressed reservations, while Hungary is adamantly opposed. The provisional duties will come into force on Friday, with the definitive duties set to take effect in November for a period of five years, pending a vote by the 27 EU states. “Our investigation… concluded that battery electric vehicles produced in China are benefiting from unfair subsidies, posing a threat of economic harm to the EU’s own electric car manufacturers,” EU Trade Commissioner Valdis Dombrovskis said. In response, the Commission imposed provisional duties on major Chinese manufacturers, including 17.4% on market leader BYD, 19.9% ​​on Geely and 37.6% on SAIC. Other producers in China that cooperated with Brussels will face a 20.8% tariff, while those that did not will be subject to the maximum 37.6% duty. Tesla, owned by US tech billionaire Elon Musk, which manufactures in China, is the only electric carmaker to have asked Brussels for its own tariff rate, which will be calculated According to the information it provided, the Tesla Model 3 would be affected, as well as the electric Mini, the Volvo EX40 and all other non-Chinese brand cars made in China. A Tesla spokesperson suggested that Model 3 prices would increase “in the short term”. The move comes despite the opening of negotiations between Chinese and EU trade officials, with trade chief Dombrovskis saying Brussels would continue “to engage intensively with China on a mutually acceptable solution”. Chinese electric carmaker Nio said it still hoped for a resolution with the EU, while its counterpart XPeng said it would “find ways to minimise the impact on consumers” without changing its international strategy. EU officials have indicated that if a negotiated solution emerges, they may not need to impose tariffs. But Dombrovskis warned that “any negotiated outcome of our investigation must clearly and fully address the EU’s concerns and comply with WTO rules”. Cui Dongshu, secretary-general of the China Passenger Car Association, told AFP the move “would obviously have a negative impact on the development of China’s electric vehicle industry, especially its development within the EU in the short term.” » Beijing has already signaled its willingness to retaliate by launching an anti-dumping investigation, and Chinese media suggest more probes could be in the works. Chinese officials have also lambasted EU investigations into government subsidies for green technology, including wind turbines. The United States has already raised tariffs on Chinese electric cars to 100%, while Canada is considering similar action. But Brussels faces a delicate balancing act as it seeks to defend the European auto industry – the jewel in its industrial crown – while avoiding a damaging confrontation with China and meeting its carbon-cutting targets. The EU wants Europeans to switch en masse to electric vehicles, as it plans to ban sales of new fossil-fuel cars from 2035. The market share of Chinese-made electric vehicles in the EU has grown from around 3% to more than 20% in the past three years, according to the European Automobile Manufacturers’ Association. Chinese brands account for about 8% of that share, she said. Germany’s Kiel Institute for the World Economy, along with the Austrian Institutes, predicted that the higher temporary tariffs would reduce vehicle imports from China by 42%. Electric car prices could rise by an average of 0.3 to 0.9% in the EU, they added.