The European Commission has concluded its investigation, initiated in October 2023, into state subsidies received by Chinese car manufacturers. As a result, provisional tariffs have been set on Chinese electric vehicles imported to Europe. SAIC (which markets brands such as MG in Europe) faces a 38.1% tariff, Geely a 20% tariff, and BYD a 17.4% tariff. These provisional tariffs are expected to be finalized and come into effect by July 4, with definitive tariffs to be established by November 2024.
Tariffs on Chinese Electric Vehicles
The varying tariff rates reflect the level of cooperation from Chinese manufacturers regarding the subsidies they received, which have been seen as giving them an unfair competitive edge in Europe, potentially harming the European auto industry.
“The entire value chain of battery electric vehicles benefits heavily from unfair subsidies in China. (…) The influx of subsidized Chinese imports at artificially low prices represents a clearly foreseeable and imminent threat of harm to the EU industry,” stated the European Commission.
The tariffs will range from 21% for manufacturers that cooperated with the European investigation to 38.1% for those that did not. These tariffs add to the existing import duties of 10% to 15% on vehicles produced outside Europe, depending on their country of origin.
Implications for Chinese Manufacturers
This move is a significant blow to Chinese manufacturers and has elicited a critical response from the Chinese government. German politicians have also expressed skepticism, fearing repercussions on exports to China. Some European car manufacturers have also criticized the tariffs, advocating for open competition. It’s important to note that many European car manufacturers produce electric vehicles in China, which are then exported to Europe.
Ensuring Fair Competition
The European Commission, led by President Ursula von der Leyen, has taken this step just days after the recent European Parliament elections.
“We have reached a significant milestone in our investigation into Chinese battery electric vehicles, announcing the provisional tariffs we intend to impose. Our goal is not to close the European market to Chinese electric vehicles but to ensure fair competition,” said European Commission Vice President Valdis Dombrovskis.
China’s Response
In Europe, the stance is that Chinese electric vehicles benefit from subsidies “from raw material extraction to their arrival in European ports,” according to a senior EU official quoted by Politico. Beijing has responded strongly, criticizing the European measures.
“The EU hasignored facts and WTO rules, disregarding strong objections from China, as well as appeals and dissuasion from governments and industries across several European states,” stated the Chinese Ministry of Commerce.
China has not only contested the tariffs but also called for an immediate correction of what it views as wrongful practices. Beijing has hinted at potential retaliatory measures targeting other sectors of European exports to China, including aviation, alcoholic beverages, and agriculture.
