Daily Management Review

EU Will Impose Additional Levies Of Up To 38% On Chinese EVs


EU Will Impose Additional Levies Of Up To 38% On Chinese EVs
The European Commission notified manufacturers that starting in July, it will levy additional taxes of up to 38.1% on Chinese electric vehicles imported into the country. China denounced this decision as protectionist, but the auto industry dismissed it as having little bearing.
In less than a month, Brussels said that it would impose further tariffs of 17.4% on BYD, 20% on Geely, and 38.1% on SAIC on top of the 10% already in place due to what it considered to be excessive subsidies, after Washington's quadrupling of levies on Chinese electric vehicles to 100%.
According to Reuters estimates based on 2023 EU trade figures, it translates to billions of euros in additional expenses for the automakers at a time they are grappling with slowing demand and falling prices at home.
The decision was made at a time when European manufacturers are under competition from Chinese competitors offering more affordable EVs.
Fears of Chinese reprisal caused shares in several of the largest European automakers to drop. These companies sell a significant amount of their cars in China. EVs manufactured in China and exported in Europe will now be subject to tariffs for some, including BMW.
"This anti-subsidy investigation is a typical case of protectionism," stated Lin Jian, a spokesman for the Chinese foreign ministry, adding that the levies would harm trade and economic cooperation between China and the EU as well as the stability of the global automotive supply chain and manufacturing.
Lin stated that Beijing will take all necessary steps to "firmly safeguard" its lawful rights and interests and that Beijing urged the EU to promote free trade.
There was little worry expressed by the Chinese Passenger Car Association.
CPCA Secretary General Cui Dongshu stated, "The EU's provisional tariffs come basically within our expectations, averaging around 20%, which won't have much of an impact on the majority of Chinese firms."
"Those exporting China-made EVs that include Tesla, Geely and BYD still have huge potential for development in Europe in the future," Cui stated.
The ministry of commerce in China declared that it will keep a careful eye on the situation and take all required action to protect the legal rights of Chinese businesses.
Beijing has already started an anti-dumping probe into brandy imports, which are mostly manufactured in France. In April, a bill was also approved to bolster its retaliatory capacity in the event that the EU or the US slap tariffs on exports from the second-largest economy in the world.
The anti-subsidy probe is scheduled to last until November 2, at which point definitive measures—which usually last for five years—may become applicable. The EU provisional duties are scheduled to take effect on July 4.
The Commission announced that it will impose rates of 21% to businesses that it believed had assisted with the probe and 38.1% to businesses that it determined had not.
Companies from the West that sell automobiles from China to Europe, including Tesla and BMW, were seen as collaborating parties.
Vice president of the Commission Margaritis Schinas warned EU automakers that Chinese-made vehicles were gaining unfair advantages from subsidies.
"On this basis the Commission has reached out to Chinese authorities to discuss these findings and explore possible ways for resolving the issues identified," he stated at a press briefing.
The suggested tariffs on Chinese EVs are higher than the 10%–25% range that experts had predicted.
There were no comments on the issue available from BYD, Geely, SAIC and Tesla.
According to some experts, the EU imported about 440,000 electric cars (EVs) from China in the 12 months ended in April, for a total import value of 9 billion euros ($9.7 billion), or about 4% of household automobile spending. As a result, the immediate economic impact of the increased taxes would be negligible.
"But the anti-subsidy duties are intended to limit the future growth in EV imports which would otherwise take place rather than to block existing trade," said Andrew Kenningham, chief Europe economist at Capital Economics.
"The decision marks a big change in EU trade policy because, although the EU has used trade defence measures regularly in recent years, including against China, it has not previously done so for such an important industry. And Europe has been reluctant to engage in the kind of protectionism that the US has deployed since Donald Trump’s presidency," he said.