It's official: since July 5th, 2024, the European Union will impose tariffs on imports of electric cars from from China. The European Commission took this decision after negotiations with the Chinese authorities failed to resolve the issue of state subsidies. According to Brussels, such subsidies “threaten the competitiveness of European electric car manufacturers”, making corrective measures necessary to protect the internal market. This measure will intensify further the already high trade tensions between China and the USE, trying to counter the advance of Chinese electric cars that are gradually conquering the global market.
A measure that will only increase the commercial tension between China and the EU already high in recent weeks. He measures that he wants to "stop" the advance of Chinese electric cars that are slowly conquering the world market.
Inconclusive consultations, there is no agreement
Despite numerous exchanges of opinions between Brussels and Beijing in recent weeks, it has not been possible to reach an agreement. The European Commission specifies that it continues to maintain "at a technical level in order to reach a solution compatible with the World Trade Organization, which adequately responds to the concerns raised by the European Union", but underlines that "any outcome of the negotiation must be effective in addressing the harmful forms of subsidy identified”. No deal on the horizon, at least for now.
The new EU duties against Chinese electric cars
The decision to impose tariffs came nine months after the start of aanti-subsidy investigation by the European Commission. These duties are provisional and will be guaranteed by one bail decided by the customs of each Member State. The final collection of duties will only occur if a final decision to impose permanent duties is made.
Tariffs on Chinese electric cars compared to the rates communicated previously, were slightly reduced following comments received on the accuracy of the calculations. The duties applied to the three main Chinese producers are:
- BYD: 17.4%
- Geely: 19.9%
- SAIC: 37.6%
Other producers who cooperated with the European investigation will be subject to an average duty of 20.8%, while those who did not cooperate will face a duty of 37.6%.
Provisional EU duties until the end of October
The provisional duties will be in effect until the end of October, period within which Member States must decide whether to make them permanent for the next five years. The final decision will depend on a vote of member states, with a "qualified majority" needed to block the tariffs. This majority requires at least 15 countries representing 65% of the EU population.
The EU's hard line, Germany's alarm was not enough
No second thoughts, therefore, within the EU. Although there was discussion for days about a possible suspension or easing of the decision, the Commission stuck to it a hard line. The European Commission claims that the tightening of tariffs aims to create a level playing field, not to exclude Chinese manufacturers, who currently hold 6% of the European electric car market.
The decision was arousing concerns among various European governments, Mostly in Germany, the main exporter to China, which fears a trade war with Beijing with negative consequences for the automotive industry and bilateral economic relations. The German Automobile Manufacturers' Association (VDA) was the latest to ask the Commission to reconsider or soften the tariffs, arguing they would hurt Western companies exporting from China and undermine Europe's goal of carbon neutrality by 2050. as well as provoking potential retaliation from Beijing.
Europe, as often happens, is divided on the issue. While Germany, like Hungary, prefers to avoid tariffs, France, Italy and Spain support tougher measures. Other countries, such as the Czech Republic, Greece, Ireland and Poland, are still discussing the issue, while Belgium and the Netherlands must first resolve their internal situations before taking sides for or against.
EU-China clash: risk of a trade war
The measure could trigger a trade war between the EU and China, with potential negative repercussions for both economies. In particular, the EU's dependence on Chinese raw materials needed for the production of electric vehicle batteries could further complicate the situation.
The European decision to impose duties on Chinese electric cars follows the similar measure of the United States, which they set 100% duties to stop the invasion of cheap, good quality Chinese cars into Western markets. A decision that Chinese manufacturers are already trying to circumvent by producing batteries and car components in Morocco, which has a free trade agreement with the US.
