European Commission Imposes Additional Tariffs on Chinese Electric Vehicles

The European Commission announced on Wednesday that it will impose additional duties of up to 38.1% on imported Chinese electric vehicles (EVs) starting next month.

This decision is expected to escalate tensions with China, which may respond with retaliatory measures.

Affected Chinese Companies:

The new tariffs will target prominent Chinese car manufacturers such as BYD, Geely, and SAIC. BYD will face tariffs of 17.4%, Geely will be subject to 20% duties, and SAIC will incur the highest rate of 38.1%. These tariffs are imposed due to what the Commission described as excessive subsidies.

In response to the EU’s announcement, China’s commerce ministry stated that it would closely monitor the situation and take all necessary actions to protect the legitimate rights of Chinese companies. The ministry emphasized its commitment to defending Chinese business interests.

The EU’s provisional duties are scheduled to take effect by July 4, with the ongoing anti-subsidy investigation continuing until November 2. At that point, definitive duties could be enforced, typically lasting for five years.

Cooperating vs. Non-Cooperating Companies:

The Commission differentiated between companies cooperating with the investigation and those not.

Companies deemed cooperative will face a tariff rate of 21%, while non-cooperating companies will be hit with the maximum rate of 38.1%. These new tariffs will be in addition to the existing 10% EU tariff on imported EVs.

Impact on Western Producers:

Western car manufacturers such as Tesla and BMW, which export vehicles from China to Europe, are considered cooperating companies and will be subjected to the 21% tariff. This distinction aims to balance the competitive landscape for European producers.

Margaritis Schinas, a Vice President of the European Commission, stated that Chinese-built cars benefit from unfair subsidies, posing a threat to EU manufacturers. Schinas indicated that the Commission has contacted Chinese authorities to discuss these findings and seek potential resolutions.

Analysts Expectations and Market Impact:

The newly announced tariffs exceed analysts’ expectations, which ranged between 10% and 25%. This move is significant in protecting the European EV market from the influx of lower-cost Chinese competitors.

Uncertain Future and Diplomatic Tensions:

As European automakers face increasing competition from Chinese rivals, the EU’s decision to impose additional tariffs underscores the growing economic friction between the two regions.

China has criticized the EU’s anti-subsidy investigation and called for cooperation but has not detailed its potential retaliatory actions. The situation remains runny, with both sides closely watching developments and preparing for possible further diplomatic and economic responses.