EU imposes significant tariffs on Chinese electric vehicles, triggering trade tensions

The European Union (EU) has announced significant import taxes on electric vehicles (EVs) made in China, a move supported by a majority of member states in a bid to safeguard the European automotive industry.

Tariffs on Chinese electric vehicles are set to rise from the current 10% to 45% over the next five years, following concerns that Chinese automakers are benefiting from unfair state subsidies.

The new tariffs, designed to level the playing field for European manufacturers, come after an EU investigation found that Chinese electric vehicle makers had received substantial state aid, allowing them to offer lower prices with which European companies find it difficult to compete. Brands like SAIC, BYD and Geely are among those targeted by the new duties, with prices adjusted to reflect the estimated level of subsidies they receive.

The move, which could spark a trade war between the EU and China, has divided member states. France, Italy, the Netherlands and Poland supported the measures, citing the need to protect the European auto industry. Meanwhile, Germany, whose economy depends largely on exports to China, has opposed the tariffs, with major carmakers like Volkswagen warning that such measures could backfire. Volkswagen described the tariffs as “the wrong approach”, highlighting the potential negative impact on trade relations.

The vote, which took place last Friday, saw many EU countries abstain, while supporters of the vote argued that inaction would risk harming the European car market. The tariffs will apply to Chinese electric vehicles for the next five years unless an alternative solution is found.

Beijing condemned the EU decision as protectionist. China’s Commerce Ministry called the move “unfair” and “unreasonable” but left the door open for negotiations, suggesting the issue could be resolved through dialogue.

The tariffs come at a delicate time for China, which is counting on the sale of high-tech products, including electric cars, to revitalize its slowing economy. The EU is China’s largest foreign market for electric vehicles, and any prolonged trade tensions could harm both economies. There are growing fears that China could retaliate by imposing tariffs on other European products, with industries such as French cognac expressing fears that their exports could suffer.

“We do not understand why our sector is being sacrificed in this way,” declared a spokesperson for the French cognac sector, which depends on the Chinese market. “A negotiated solution must be found.”

The decision also raises concerns about the cost of electric vehicles for European buyers. As tariffs drive up prices, many fear that Europe’s already slow growth in electric vehicle adoption could stall further. In August, registrations of battery-electric cars in the EU fell 43.9% from a year earlier, sparking concerns that the market is struggling to keep up with targets set for the phase-out vehicles powered by fossil fuels.

In the UK, demand for electric vehicles hit a record high in September, driven by trade deals and heavy discounts from manufacturers. However, industry experts have warned that these incentives may not be sustainable in the long term. The Society of Motor Manufacturers and Traders (SMMT) has expressed concerns that the market is “not growing fast enough” to meet upcoming electric car sales targets.

Under the UK’s zero-emission vehicle (ZEV) mandate, at least 22% of vehicles sold this year must be zero-emission, with the target rising to 80% by 2030 and 100% by 2035. Manufacturers who do not respect these quotas could be fined. of £15,000 per car.

Several carmakers, including BMW, Ford and Nissan, have urged the British government to reconsider current targets, citing economic factors such as rising energy and materials costs as reasons for rising electric vehicle prices.

The average cost of an electric vehicle in the UK is currently around £48,000, which remains a barrier for many potential buyers.