EU Imposes Tariffs on Chinese EVs
The European Union (EU) has decided to apply provisional tariffs on Chinese electric vehicles (EVs) starting from July 4th. These tariffs will remain in place until negotiations with the Chinese government are concluded by October, at which point they could become permanent. The decision to impose these tariffs comes after the European Commission accused MG owner SAIC of failing to cooperate with the investigation, resulting in a 37.6% additional tariff on imported EVs.
The EU has also imposed additional tariffs on other Chinese EV manufacturers. BYD must pay an extra 17.4% tariff, while Geely faces an additional 19.9% tariff. Chinese firms that cooperated with the investigation have been hit with a 20.8% additional tariff, while those that didn’t face a higher tariff of 37.6%. German car makers, including Mercedes-Benz, BMW, and the Volkswagen Group, have expressed their opposition to these tariffs as they sell more cars in China than in any other market. They fear that these tariffs could lead to retaliation from China and jeopardize their high-profit export of high-end internal combustion engine (ICE) cars to China.
The EU’s decision to impose tariffs on Chinese EVs is based on the belief that cheaper Chinese EVs pose a threat to EU battery electric vehicle (BEV) producers. The European Commission argues that the BEV value chain in China benefits from unfair subsidization, leading to significantly lower prices for Chinese EVs compared to EU counterparts. The EU market is attractive to Chinese manufacturers due to legislative efforts to increase EV sales and reduce average CO2 levels.
While the EU has taken action, the UK has not yet followed suit in raising tariffs on Chinese EVs. However, industry experts believe that the UK will likely have to follow the EU’s lead or face increased pressure from Chinese manufacturers to shift EV sales to the UK. The UK can initiate an investigation into unfair subsidies benefiting Chinese EV makers if it receives a complaint from a British manufacturer or if the Secretary of State deems it necessary. So far, no complaint has been made.
In conclusion, the EU’s decision to impose provisional tariffs on Chinese EVs reflects concerns about unfair subsidization in the Chinese market and the potential economic threat posed to EU BEV producers. While German car makers have expressed opposition to these tariffs, the UK may be compelled to follow suit in order to maintain a level playing field and protect its own manufacturers. The ongoing negotiations between the EU and China aim to find a WTO-compatible solution that can address these concerns and ensure fair competition in the EV market.