Brussels announces taxes on the import of Chinese electric vehicles

Brussels announced on Wednesday up to 38% additional customs duties on imports of Chinese vehicles into the European Union.

The European Union is raising its voice in the face of unfair competition from China in the electric vehicle sector. After several months of careful investigation, the European Commission announced on Wednesday June 12 that it wanted to significantly increase customs duties for Chinese manufacturers entering the internal market. We are far from the 100% tax imposed by the Americans but this decision, if confirmed, could still trigger a trade war.

What the Commission’s sleuths discovered in China was a production chain for electric cars that was totally subsidized – by the Chinese central government but also the regions and provinces. From the extraction of lithium, which is used to make electric batteries, to the assembly lines: the entire sector benefits from direct financial aid, lower taxes, and easier access to bank loans. Brussels therefore wants to impose customs barriers on the Chinese which will range from 27.5% to 48%. Still far from the 100% recently imposed by the Americans and the 70% demanded by India. But the European Union points out that it is acting within the framework of WTO rules that Beijing has committed to respecting.

These amounts are set according to a very precise scale which takes into account both the amount of public aid estimated for each company as well as its level of collaboration. But if the EU manufacturers have played the game of transparency, this is not the case of the Chinese, indicates a high-ranking expert from the Commission. BYD, the leading Chinese brand of electric vehicle, will be taxed the least: around 30% compared to nearly 50 for the SAIC group, owner of MG.

The impact is difficult to establish at this stage because these are measures which have been announced but are provisional and which will come into force on July 5. Until then, the Chinese can challenge the planned increase. Then, the member states will also have until the beginning of November this time to also oppose it but a qualified majority is required. Germany should fight against this measure. German manufacturers who sell more than a third of their cars in China are afraid of reprisals. From there to finding a blocking majority is still difficult. But China does not hide that it could also in return tax Cognac, milk or European wine.

The battle is not completely over but it is still a strong decision by the European Commission, in a context where the Europeans’ stated priority is to protect their strategic industries. The electric car is one of them and the misadventure of the European solar panel industry being destroyed by China is on everyone’s minds.