EU to hit Chinese electric cars with tariffs of up to 48%
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Brussels will impose tariffs of up to almost 50 per cent on Chinese electric vehicles, brushing aside German government warnings that the move risks starting a costly trade war with Beijing.
The European Commission notified carmakers on Wednesday that it would provisionally apply additional duties of between 17 and 38 per cent on imported Chinese EVs from next month.
The duties will be applied on top of existing 10 per cent tariffs on all Chinese EVs, depending on the extent to which they complied with an EU anti-subsidy investigation into electric carmakers that was announced last September.
Major exporters including BYD, the world’s largest electric-vehicle manufacturer, and Geely will be hit with additional individual tariffs of between 17 and 20 per cent.
European brands such as Mercedes and Renault exporting EVs made in China will pay 21 per cent while Tesla “may receive an individually calculated duty rate”, the commission said.
Companies considered not to have co-operated with the probe, including Shanghai’s state-owned group SAIC, will be subject to the 38 per cent rate. SAIC has dominated the lower end of the European EV market through its MG brand.
“We have no option but to act in the face of soaring imports of heavily-subsidised battery electric vehicles, from China,” Valdis Dombrovskis, EU trade commissioner, told the Financial Times. “This puts our industry at risk of injury.”
Manufacturers in China that were considered to have co-operated with the EU investigation but which were not assigned individual rates will be subject to a 21 per cent average rate, including European companies such as Mercedes and Renault.
Dombrovskis said he would use the three weeks until definitive duties are imposed on July 4 to negotiate with Beijing. “We’re open to discuss other possible ways to remedy this situation.”
China’s commerce ministry said it was “highly concerned and strongly dissatisfied” with the “ill-informed and lawless” EU action, warning that it would “take all necessary measures” to protect Chinese companies’ rights.
“The European Commission politicise and weaponise economic and trade issues,” the ministry said. “The EU fabricated and exaggerated the so-called subsidies. This is a naked protectionist act.”
The tariffs, championed by France, will raise billions of euros for the EU budget annually as sales of Chinese EVs grow in Europe. China, the bloc’s largest trading partner, exported €10bn of electric cars to the EU in 2023, according to analysts at Rhodium Group.
Beijing, which already applies a 15 per cent tariff on European EVs, has sought to persuade a majority of EU capitals to oppose the new tariffs.
Germany, Sweden and Hungary have said they do not approve of the move, fearing Chinese retaliation. EU officials say Berlin put pressure on Ursula von der Leyen, who is seeking a second term as commission president, to drop the anti-subsidy investigation.
Steffen Hebestreit, spokesman for German chancellor Olaf Scholz, on Wednesday welcomed the commission’s offer of talks with Beijing. “There’s still time till 4 July and in our view it would be desirable to arrive at a mutually agreed solution,” Hebestreit said.
Dombrovskis said there was “broad support” among member states.
The Kiel Institute, an economic think-tank, has estimated an extra 20 per cent tariff on Chinese electric cars would reduce imports by a quarter. It calculated that this corresponded to an estimated 125,000 units worth almost $4bn.
“The decline would largely be offset by an increase in production within the EU and a lower volume of EV exports, which would likely mean noticeably higher prices for end consumers,” the researchers concluded.
Dombrovskis said the market share of EVs imported from China increased from 4 per cent in 2020 to 25 per cent in September 2023.
His department amassed evidence Chinese carmakers and their suppliers received subsidised loans, tax breaks and cheap land, according to officials.
Many EU carmakers fear China might respond in kind or even block them from its market. Germany exported 216,299 cars to China in 2023, a drop of 15 per cent on the year before.
Geely owns Volvo of Sweden. Prime Minister Ulf Kristersson has joined Scholz and Hungarian premier Viktor Orbán in opposing the EU tariffs.
The three leaders would need to secure at least 12 other governments to overturn the tariffs decision. Member states will vote on them before November 2.
BYD, Geely, SAIC and Tesla China did not immediately respond to requests for comment.
Shanghai-headquartered EV maker Nio, which has invested heavily in developing the EU market, said the use of tariffs “hinders rather than promotes global environmental protection, emission reduction and sustainable development”, but it remained “hopeful for a solution”.
Additional reporting by Wenjie Ding in Beijing and Guy Chazan in Berlin
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