Following an investigation into production practices in China, specifically trying to find out if subsidies offered by the state put Chinese manufacturers at an unfair advantage in the European market, the EU approved additional import tariffs on Chinese EVs on Friday.
From the 27 Member States, 10 voted inn favour, 5 against and 12 abstained. This was enough for the European Commission to move ahead with the proposed levies. “Today, the European Commission’s proposal to impose definitive countervailing duties on imports of battery electric vehicles (BEVs) from China has obtained the necessary support from EU Member States for the adoption of tariffs. This represents another step towards the conclusion of the Commission’s anti-subsidy investigation”, the Commission wrote in a statement.
The investigation was launched in October 2023, aiming to find whether battery electric vehicle (BEV) value chains in China benefit from illegal subsidisation and whether this subsidisation causes or threatens to cause economic injury to EU BEV producers.
Preliminary conclusions of the investigation, revealed on 12 June, show that there are indeed unfair subsidies for EV producers in China, “causing a threat of economic injury to EU BEV producers”. Consequently, specific import tariffs have been set to start applying on 4 July, should no other resolution be found together with Chinese authorities.
Three producers would be put under very specific import tariffs: Tesla at 7.8%, BYD at 17%, Geely at 18.8% and SAIC at 35.3%. Other producers that cooperated with the EU investigation would be subject to a weighted average duty of 20.7%, while those that did not cooperate will be subject to the maximum 35.3% residual duty.
The taxes should start applying as of 31 October, however the Commission has said there is still room for negotiation to find a middle ground before and even after the deadline. “In parallel, the EU and China continue to work hard to explore an alternative solution that would have to be fully WTO-compatible, adequate in addressing the injurious subsidization established by the Commission’s investigation, monitorable and enforceable”, the institution explained.
In its turn, China has previously indicated it was prepared to take retaliatory measures should the tariffs take effect. A Chinese commerce ministry spokesperson has warned of a possible “trade war” as “responsibility lies entirely with the European side” for escalading “trade frictions”.
The country already started its own anti-dumping investigation into pork imports from the EU. Dairy products are also part of the investigation and other agricultural produce might be added. Moreover, according to Jacob Gunter, lead analyst at Berlin-based China studies institute MERICS, “It seems probable that Beijing will raise tariffs up to 25% for Europe-made cars with 2.5 or above litre engines.”
