EU to Impose Up to 38.1% Tariffs on Chinese EV Imports

The European Commission announced it would impose additional tariffs of up to 38.1% on Chinese electric vehicle (EV) imports starting July 4. This decision follows a detailed investigation into allegations of unfair subsidies benefiting Chinese EV manufacturers, which the Commission argues pose a threat to the European automotive industry.

The tariffs will vary based on the level of cooperation with the investigation:

• BYD will face a tariff of 17.4%.

• Geely will be subject to a 20% duty.

• SAIC, along with other non-cooperative companies, will incur the maximum tariff of 38.1%.

These tariffs are in addition to the existing 10% duties, significantly increasing costs for these manufacturers. This equates to billions of euros in additional expenses, potentially straining companies already grappling with slowing demand and falling prices in their domestic markets.

Chinese officials and industry representatives have criticized the EU's decision. Lin Jian, a spokesperson for the Chinese Foreign Ministry, labeled the investigation a "typical case of protectionism" and warned it would harm China-EU economic relations. The Ministry of Commerce of China echoed these sentiments, asserting that the EU's findings lack both factual and legal basis and that the tariffs represent a naked protectionist act. They also warned that this move could disrupt the global automotive supply chain.

Conversely, the Chinese Passenger Car Association (CPCA) downplayed the impact. Cui Dongshu, Secretary General of the CPCA, remarked that the average tariff of around 20% was within expectations and would not significantly affect most Chinese firms exporting EVs to Europe. He suggested that companies like Tesla, Geely, and BYD still have considerable growth potential in the European market.

Valdis Dombrovskis, EU Trade Commissioner, stated that the investigation was grounded in "facts and evidence." He emphasized the need to protect the EU industry from the influx of heavily subsidized Chinese EVs sold at artificially low prices, which threaten imminent injury to EU manufacturers.

Commission Vice President Margaritis Schinas elaborated on the findings, explaining that Chinese-built cars benefit from unfair subsidy levels that distort the market. Schinas added that the Commission has engaged with Chinese authorities to discuss the findings and seek possible resolutions.

The provisional tariffs will be in place until November 2, when the Commission is expected to decide on definitive duties, typically lasting five years.

The EU's decision aligns with a broader trend of rising trade tensions between major economies over EVs. The United States recently increased its tariffs on Chinese EVs to 100%, quadrupling the previous rate. These measures reflect growing concerns in the West about China's aggressive industrial policies and the impact of its state-supported companies on global markets.

In Europe, the response to the new tariffs has been mixed. France has been a strong advocate for higher duties to protect its automotive sector, while Germany has expressed reservations, warning of potential retaliatory measures from China. German automakers, who rely significantly on the Chinese market, are particularly wary of escalating trade disputes.