EU Imposes Tariffs of Up to 38% on Chinese Electric Vehicles

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The European Commission has announced that it will impose provisional duties on Chinese electric cars. This decision aims to counteract what the Commission describes as unfair subsidies received by Chinese electric vehicle makers.

The European Commission announced on Wednesday that it will impose new tariffs on Chinese electric vehicles, ranging up to 37.6%, starting from Friday. The Commission stated that these tariffs are necessary to counteract what it sees as "unfair" subsidies provided by the Chinese government to electric vehicle makers, which it claims threaten European car manufacturers with economic harm.

Effective from Friday, these new provisional tariffs will be added to the existing 10% import duties. A final decision on these tariffs is expected in November, as Brussels and Beijing continue negotiations to resolve the issue. European Union Trade Chief Valdis Dombrovskis emphasized that the EU's imposition of tariffs does not justify retaliatory actions from China. He clarified that the aim is to prevent an influx of low-cost, state-subsidized electric vehicles into the European market.

European Commission President Ursula von der Leyen highlighted that the new provisional tariffs, ranging from 17.4% to 37.6%, are intended to prevent a potential surge of subsidized electric vehicles from flooding the market. The Commission adjusted these tariffs slightly after initial calculations were scrutinized by companies for minor errors.

The EU's anti-subsidy investigation will continue for the next four months under provisional tariffs, while intensive negotiations with China continue. The Commission may propose definitive duties lasting five years, subject to approval by EU members, following the investigation.

In response, Beijing expressed intentions to take "all necessary measures" to protect China's interests. Chinese officials have discussed the possibility of imposing retaliatory tariffs on products such as cognac and pork imported into China. The Chinese Commerce Ministry confirmed ongoing technical discussions between both sides on tariff issues.

Meanwhile, the Chinese Passenger Car Association downplayed the impact of these tariffs on most Chinese firms, noting they would have only a modest effect. Companies that cooperated with the EU's anti-subsidy investigation, including Tesla and BMW, will face a 20.8% tariff on vehicles made in China, while non-cooperative companies will face a 37.6% tariff.

The Commission estimates that Chinese brands have significantly increased their share of the EU market, rising from less than 1% in 2019 to 8% currently, with projections to reach 15% by 2025. It also pointed out that Chinese electric vehicles are generally priced 20% lower than those made in the EU.

European policymakers aim to avoid a repeat of the solar panel crisis a decade ago, where limited EU actions on Chinese imports led to the collapse of many European manufacturers. In a parallel move, the United States plans to impose a 100% tariff on Chinese electric vehicle imports starting in August.