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EU threatens higher tariffs on Chinese electric cars

June 12, 2024

The European Union says it will hike tariffs on Chinese electric vehicles from next month unless it can be reassured of an end to subsidies from Beijing.

https://p.dw.com/p/4gx7D
The photo taken on January 10, 2024 shows electric cars for export waiting to be loaded on the "BYD Explorer No 1"
Brussels says China's subsidies cause the "threat of economic injury" to electric car producers in the European UnionImage: AFP

The European Commission on Wednesday said it would impose provisional duties of up to 38.1% on imports of Chinese electric vehicles after an investigation into illegal support from Chinese government subsidies.

However, Brussels said there might be time to resolve the issue before the interim tariffs are imposed next month.

How the tariffs would be applied

The Commission said China's electric car subsidies pose the "threat of economic injury" to electric car producers in the European Union.

The provisional levies would vary between producers at 17.4% on BYD cars, 20% on Geely, and 38.1% on SAIC vehicles.

The EU provisional duties are set to apply by July 4, and the anti-subsidy investigation is set to continue until November 2.

After that, "definitive duties," typically in place for five years, would apply.  Brussels said the Commission would then apply rates of 21% for companies deemed to have cooperated it and 38.1% for those that did not.

Electric cars: China's BYD on the rise

The EU's threat follows US punitive measures on Chinese electric car imports, with Washington raising tariffs to 100%.

What was China's reaction?

The Chinese Commerce Ministry said it would closely follow the development and would take all necessary measures to safeguard Chinese companies' legitimate rights.

Ahead of the announcement, Beijing said any such a move would "harm Europe's own interests."

"It goes against the principles of market economy and international trade rules, undermines China-EU economic and trade cooperation as well as the stability of the global automobile production and supply chain," foreign ministry spokesman Lin Jian said.

Within the EU, there is also disagreement. Germany, a major trade partner to China with a huge automobile sector, said the tariffs would harm German companies.

German Transport Minister Volker Wissing on Wednesday said the threat risked a "trade war" with Beijing.

"The European Commission's punitive tariffs hit German companies and their top products. Cars must become cheaper through more competition, open markets, and significantly better business conditions in the EU, not through trade war and market isolation," Wissing said on X, the platform formerly known as Twitter.

rc/kb (dpa, Reuters, AP)