EU to Impose Up to 38.1% Tariffs on Chinese Electric Vehicles

The EU’s European Commission announced on Wednesday that it would impose additional duties of up to 38.1% on imported electric vehicles (EVs) from China, a move likely to provoke retaliation from Beijing, which has labeled the decision as protectionist.

Starting in July, the new tariffs will be added to the standard 10% car duty currently in place. The Commission stated that the increased duties, ranging from 17.4% for BYD to 38.1% for SAIC, are intended to combat what it describes as excessive subsidies provided by the Chinese government to its domestic EV manufacturers. This equates to billions of euros in extra costs for Chinese carmakers, exacerbating the financial pressure they already face due to slowing demand and falling prices in their home market.

This development follows closely on the heels of a similar move by Washington, which announced plans less than a month ago to quadruple duties on Chinese EVs to 100%.

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European automakers are facing significant challenges from the influx of lower-cost EVs from China. The Commission estimates that the market share of Chinese brands in the EU has surged from below 1% in 2019 to 8% today, with projections suggesting it could reach 15% by 2025. Chinese EVs are typically priced 20% lower than their European counterparts, intensifying the competitive pressure on local manufacturers.

“This decision marks a significant shift in EU trade policy,” said Andrew Kenningham, Chief Europe Economist at Capital Economics. “While the EU has frequently used trade defenses against China, it has not previously targeted such a critical industry.”

The new tariffs reflect European policymakers’ determination to avoid repeating the mistakes of the past. A decade ago, limited action against Chinese imports led to the collapse of many European solar panel manufacturers. The EU launched an anti-subsidy investigation into China’s electric vehicles in October, signaling a more assertive stance in protecting its industries.

Source: Reuters