EU Imposes Heavy Tariffs on Chinese Electric Vehicles To ‘Level Competition’

The European Union has imposed tariffs of up to 37.6% on Chinese electric vehicles (EVs) starting July 5. The tariffs range from 17.4% to 37.6% and are provisional for four months as the Commission continues its investigation. If confirmed, these duties could last for five years, pending a vote by the EU’s 27 member states. The EU’s current 10% duty on all Chinese EVs remains in place.

The European Commission on Thursday announced the decision following a nine-month investigation that reportedly found Chinese EV manufacturers benefiting from substantial state subsidies. These subsidies, spread across the entire production chain, allow Chinese companies to sell EVs at significantly lower prices than their European counterparts. The Commission estimates this price gap has helped Chinese EVs capture 8% of the EU market, up from less than 1% in 2019. There are projections that the figure will reach 15% by 2025.

The tariffs apply to various Chinese manufacturers, including BYD (17.4%), Geely (19.9%), and SAIC (37.6%). Western companies producing EVs in China, such as Tesla and BMW, will face a 20.8% tariff if they cooperate with the investigation. In comparison, non-cooperating firms will be subject to the highest rate of 37.6%.

European officials argue the tariffs are necessary to address the “threat of economic injury” posed by subsidised Chinese EVs. The Commission argued that the influx of low-cost imports could jeopardise millions of jobs in the EU’s automotive sector.

In response, China has criticised the EU’s move as being unfair and vowed to take all necessary measures to protect its interests. This could include retaliatory tariffs on European exports such as pork and cognac. The Chinese Ministry of Commerce also called for a dialogue to resolve the issue during the four-month provisional period before the tariffs become permanent.

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