European Commission Approves Steep Tariffs on Chinese Electric Vehicles
In a bold move, the European Commission has given the final green light to imposing steep tariffs on electric vehicles (EVs) manufactured in China. This decision marks the end of a year-long probe into unfair trade practices.
The newly approved tariffs will take effect starting Wednesday and will be enforced for the next five years. Despite this, negotiations between Brussels and Beijing are ongoing in hopes of reaching a deal on minimum prices that could potentially replace the tariffs. However, the complexity of this proposed solution, championed by Germany, poses significant challenges in its implementation.
“By implementing these targeted measures following a thorough investigation, we are advocating for fair market practices and safeguarding the European industrial base,” stated Valdis Dombrovskis, the Commission’s executive vice president responsible for trade.
The anticipated enforcement of these tariffs comes after a recent inconclusive vote among member states earlier in the month. With an inability to secure a majority in favor or against the measures, the Commission exercised its trade powers to break the deadlock and approve the duties. The tariffs, which vary by brand, will be as follows:
Tesla: 7.8%
BYD: 17%
Geely: 18.8%
SAIC: 35.3%
Other EV producers in China who cooperated in the investigation: 20.7%
Other EV producers in China who did not cooperate: 35.3%
The Commission justifies the need for additional tariffs to counteract the alleged subsidies injected by Beijing into its domestic EV sector. These subsidies have enabled Chinese manufacturers to sell their vehicles at artificially low prices, giving them a competitive edge over European counterparts.
As a result, Chinese EV sales in Europe have skyrocketed, with their market share increasing from 1.9% in 2020 to 14.1% in the second quarter of 2024, according to Commission estimates.
Concerns have been raised about the impact on the EU’s automotive industry, which is already facing challenges such as high energy costs, weak consumer demand, and fierce global competition. The Commission warns that without decisive action, EU carmakers could face substantial losses and risk being pushed out of the growing market for electric vehicles.
Despite the implementation of tariffs, Brussels remains committed to finding a resolution with Beijing that complies with World Trade Organization (WTO) regulations and can be enforced through customs duties. However, reaching a mutually agreeable solution has proven to be elusive thus far.
China has vehemently opposed the Commission’s investigation, labeling it as a “naked protectionist act” and denying the existence of subsidies. The country has threatened retaliatory measures against key EU industries, casting a shadow of uncertainty over future trade relations.
With the United States and Canada already imposing hefty tariffs on Chinese EVs, Europe stands as one of the few lucrative markets remaining for Beijing’s high-end products.
Source: Euronews
