European Union to slap additional tariffs up to 38.1% on imported EVs made in China as soon as July 5

The European Commission (EC) announced a few days ago its provisional decision to increase tariffs on electric vehicles (EVs) manufactured in China and exported into the European Union (EU). The decision comes following an investigation launched by Brussels, Belgium last year into Chinese electric car subsidies, which were deemed to be unfair to Europe’s carmakers.

In a statement issued by the EC, the hiked tariffs will be applied by July 5 this year at the latest and will be added to the existing tariff of 10%. The additional tariffs that Brussels will apply will range from 17.4% to 38.1% depending on how well EV manufacturers cooperated with EU investigators.

According to The Guardian, SAIC Motor has been slapped with the highest tariff of 38.1%, while Geely and BYD face a tariff of 20% and 17.4% respectively. Some automakers like BYD are ahead of the curve with plans to set up plants in Europe, including in Hungary.

“The European Commission is right to be concerned about the competitiveness of the EU as a manufacturing hub and the challenges posed by Chinese manufacturers, but tariffs can only provide a temporary respite and bear the risk of retaliation,” said CLEPA (European Association of Automotive Suppliers) secretary general Benjamin Krieger.

“Global trade requires a level playing field and may necessitate corrective measures. However, protectionism cannot be the answer to restoring European competitiveness. Consolidated efforts are needed to make the EU attractive again for investment,” he added.

The EC also said in its release that China’s automotive market represents a third of the global industry, adding that many European suppliers provide components and systems to both international and Chinese automakers for use in vehicles.

Lower-cost EVs entering Europe have been challenging offerings from European automakers. As reported by Reuters, the EC estimates the share of made-in-China EVs has rise to 8% from below 1% in 2019 and could rise to 15% by 2025. It noted that the prices of EVs imported from China are typically 20% below those made in the EU.

The tariff hike poses a problem to German automakers that have a presence in China, with the German Chamber of Commerce (GCC) claiming the tariffs are not in favour of the global auto industry. Norway and Hungary have also voiced their opposition to the tariff hikes.

“Now what is the goal, if you implement those [tariffs] to protect the industry, but the industry says they do not want this protection?” As we need the Chinese market to remain open, therefore we are also longing to keep the European market open,” said Maximilian Butek, executive director of the GCC in East China.

China is an important market for German automakers such as Mercedes-Benz, BMW and Volkswagen, which have joint ventures with local partners and are heavily invested in the new energy vehicle (NEV) industrial chain abroad.

The EU’s move is not dissimilar to that of the United States, which said in May that tariffs on China-made EVs would be increased from 25% to 100%. China has said previously that it would temporarily raise tariffs on large-engine cars – including those from the European Union (EU) – in response to the West’s attempt to limit the import of Chinese-brand EVs.

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