On August 26, 2024, employees of Huai’an BYD Industrial Co., Ltd. worked on the new energy vehicle production line in Huai’an City, Jiangsu Province, China.
Zhao Qirui | Visual CG | Visual China Group | Getty Images
The EU decided to raise tariffs on Chinese-made electric vehicles to as high as 45.3% at the end of its most high-profile investigation, which divided Europe and triggered retaliation from Beijing.
More than a year after launching a countervailing investigation, the European Commission will impose a 7.8% tariff on Tesla and an additional 35.3% tariff on China’s SAIC Motor on top of the EU’s standard 10% auto import tariff.
A senior EU official said the additional tariffs were formally approved on Tuesday. The new rate will be published in the Official Journal of the European Union later in the day or on Wednesday. They will take effect the next day.
The European Commission, which oversees EU trade policy, said the tariffs were needed to tackle what it called unfair subsidies, including preferential financing and grants, as well as below-market prices for land, batteries and raw materials.
The report states that China’s idle production capacity of 3 million electric vehicles per year is twice the size of the EU market. With 100% tariffs in place in the United States and Canada, the most obvious export for these electric vehicles is Europe.
Beijing calls EU tariffs protectionist and harms Sino-EU relations and auto supply chains, and this year launched investigations into imports of EU brandy, dairy products and pork products in an apparent retaliation.
It also challenges the EU’s interim measures at the World Trade Organization.
European automakers are grappling with an influx of low-cost electric vehicles from Chinese rivals. The European Commission estimates that Chinese brands’ share of the EU market has risen from less than 1% in 2019 to 8%, and may reach 15% in 2025.
The EU’s stance on Beijing has become tougher over the past five years. It views China as a potential partner in some areas, but also a competitor and systemic adversary, but EU member states are divided on the issue of electric vehicle tariffs.
Germany, the EU’s largest economy and major car producer, opposed the tariffs in a vote earlier this month, with 10 EU member states supporting it, five voting against and 12 abstaining.
German carmakers have harshly criticized the EU measures, aware that they would be hit hardest by China’s potential higher import tariffs on large-engine gasoline cars.
The measures come as thousands of German industrial workers, including at carmakers, are on strike demanding higher wages. Volkswagen It may be about to announce the closure of its local factory for the first time in its 87-year history.
Hungarian Prime Minister Viktor Orban said that the EU is about to start an “economic cold war” with China.
However, France’s PFA automobile association welcomed the tariffs, adding that it supported free trade as long as it was fair.
The European Commission has held eight rounds of technical talks with China to find alternatives to the tariffs and has said negotiations can continue after the tariffs are imposed.
The two sides are considering possible minimum price commitments for imported cars and agreed on Friday to hold another round of talks, although the European Commission said “a huge gap remains”.
It remains to be seen what impact the tariffs will have on consumer prices. Some producers may be able to at least partially absorb them.
According to data from the China Passenger Car Association, China’s electric vehicle exports to the EU fell by 7% annually in the first nine months of 2024, but exports surged by more than a third in August and September before the tariffs were implemented. )exhibit.
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