EU to Slap Tariffs of Up to 48% on EV Imports From China

The European Union (EU) is set to impose additional tariffs on electric vehicles (EVs) imported from China starting next month, which could increase levies up to 48%. This move is aimed at addressing concerns about subsidies that Chinese manufacturers receive, and comes amid escalating trade tensions that will impact the cost of purchasing EVs in Europe [para. 1]. The EU's decision followed an investigation that began last year and officially informed automakers like BYD, Geely, and SAIC Motor Corp about these charges [para. 2].

The tariffs will vary based on the level of cooperation during the probe, with SAIC, the owner of the MG brand, facing the highest increase of 38.1%, in addition to the existing 10% duty [para. 3]. This comes despite objections from China, whose Ministry of Commerce has vowed to safeguard Chinese companies' legitimate rights, suggesting that the EU disregarded facts, WTO regulations, and objections from various EU member states and industries [para. 4].

Other Chinese automakers are also affected, with BYD facing an additional 17.4% in tariffs and Geely, which owns Volvo Car AB, facing an additional 20%. Western carmakers such as Tesla, BMW, and Renault, which manufacture in China, will also incur additional costs, with extra charges averaging 21% [para. 5]. Bill Russo, CEO of Automobility, remarked that the tariffs are a strategic move to slow down Chinese competition and encourage localization [para. 6].

One-fifth of battery-electric vehicles sold in the EU in 2023 were made in China, a figure projected to rise to 25% this year, according to Transport & Environment [para. 7]. China has threatened retaliatory measures across multiple sectors, including agriculture and the automotive industry, and has begun investigating certain European liquor types [para. 9].

The announcement led to a drop in stock prices of Chinese EV manufacturers, with Geely and Xpeng Inc. falling by over 5% and BYD by up to 3.9% [para. 10-11]. The EU's new tariffs are intended to protect the region's car industry and related jobs, amidst a green agenda focused on reducing CO2 emissions from transportation. However, market challenges such as Germany's removal of buying incentives for EVs complicate this objective [para. 12-13].

According to Moritz Schularick, President of Germany’s Kiel Institute for the World Economy, these tariffs may reduce imports from China by a quarter, valued at around $4 billion. Schularick emphasized the difficulty in balancing fair competition with promoting green technologies, noting that the tariffs would likely increase EV prices and make the climate transition more costly [para. 14].

The German Chancellor, Olaf Scholz, cautioned against restricting automotive trade with China, pointing out that German automakers, which sold millions of cars in China, would suffer greatly in a trade spat [para. 15-16]. Mercedes-Benz CEO Ola Källenius called for open markets, stressing that retaliatory measures from China could severely impact Western manufacturers [para. 17].

The EU has launched several trade probes against Beijing, especially targeting the clean-technology sector, including EVs [para. 19]. The final duty levels are expected to be confirmed by November [para. 20]. Amidst reduced sales projections for EVs in Europe, China's dominance in the global EV market has prompted protective measures from both Washington and Brussels [para. 22-23]. China has warned Brussels to reconsider the penalties, threatening tariffs on large-engine imported cars, and has been actively engaging with European officials to present their case [para. 25].