The EU will implement additional tariffs on electric vehicles imported from China starting Wednesday, despite Germany’s opposition. The measure follows findings that Chinese manufacturers benefit from unfair subsidies, allowing their vehicles to be sold significantly cheaper than EU counterparts. The tariffs, which range from 17% to 35.3%, aim to protect the European automotive industry. German manufacturers express concern over potential retaliation from China and the impact on their sales, amid fears of escalating trade conflicts.
The long-anticipated decision has been made: Starting Wednesday, the EU will enforce new tariffs on electric vehicles imported from China, despite objections from Germany.
The European Union’s additional tariffs on electric cars from China are set to take effect, following the EU Commission’s adoption of the necessary regulations. With the official announcement in the EU Official Journal, the measures will be implemented as planned.
A significant majority of EU member states backed the punitive tariffs in a vote earlier this month. Germany opposed the move, citing concerns about a potential trade conflict and the risk of retaliatory actions against German companies. However, the European Commission argues that these countervailing duties are crucial for the long-term viability of the EU automotive industry.
Concerns Over Unfair Subsidies
An investigation by Brussels competition authorities revealed that Chinese manufacturers are benefiting from unfair subsidies that give them a substantial edge in the European market. This results in Chinese electric vehicles typically being around 20% cheaper than their EU counterparts. Consequently, the EU Commission introduced provisional countervailing duties in July, and from now on, electric cars from BYD will incur an extra 17.0% duty, while vehicles from Geely will face an 18.8% duty. The maximum rate can go up to 35.3%.
Negotiations aimed at reaching a friendly resolution to the trade dispute have been unsuccessful so far. One possibility discussed was for electric vehicle dealers to agree to price commitments to avoid the tariffs.
Concerns Over China’s Reactions
The response from China to the new import tariffs remains uncertain. The Chinese government has accused the EU of engaging in protectionist practices and has previously threatened to impose higher tariffs on imports of large-displacement combustion engines from the EU. This could significantly impact German automakers. Additionally, China is considering imposing extra tariffs on imports of pork and dairy products as potential retaliatory measures.
The ongoing trade dispute poses a significant risk for German industry, especially since China represents the largest car market globally. German companies like VW, Mercedes, and BMW produce vehicles specifically for the Chinese market and for export.
Impact on Car Manufacturers
The German Association of the Automotive Industry has expressed concern that these tariffs will exacerbate the risk of a trade conflict and lead to higher prices for consumers. They warn that the advancement of electromobility and the achievement of climate objectives could be hampered at a critical juncture.
On the other hand, the EU Commission suggests that the automotive industry’s leadership is primarily motivated by short- and medium-term performance metrics, rather than the long-term health of the automotive sector.