EU to impose extra tariffs of up to 38.1% on Chinese BEVs
China sounds alarm, warning that trade and economic cooperation are at risk.
The European Commission announced its decision to impose extra duties on imported battery electric vehicles (BEVs) from China up to 38.1%.
The commission would apply individual duties to three sampled Chinese producers namely BYD (17.4%), Geely (20%), and SAIC (38.1%).
Other BEV producers in China, which cooperated in the investigation but have not been sampled, would be subject to 21% weighted average duty.
All other BEV producers in China which did not cooperate in the investigation would be subjected to 38.1% residual duty.
The move was in response to what the EU deemed as excessive subsidies provided by China to its electric vehicle manufacturers such as BYD, Geely, and SAIC.
The new tariffs would be in addition to the existing 10% tariffs and would result in billions of euros in extra costs for the affected carmakers.
The commission however clarified that the pre-disclosed duties are "not in force."
With this, sampled companies already can provide comments only on the accuracy of the calculations.
By 4 July 2024 at the latest, the Commission said it would publish in the Official Journal a regulation explaining in detail the provisional findings which led to this level of duties.
Duties would then take effect following publication.
EU basic anti-subsidy regulation requires the Commission to pre-disclose to interested parties the intended imposition of provisional measures.
The decision by the European Commission comes less than a month after the United States had quadrupled duties on Chinese electric vehicles to 100%.
This move was part of a broader effort by the EU to address the influx of lower-cost electric vehicles from Chinese manufacturers, which were posing a challenge to European automakers.
The European Union Chamber of Commerce in China raised concerns about the tariffs, calling for a more proportionate and transparent approach in line with World Trade Organization rules.
Chinese subsidies criticised
Meanwhile, in a news conference, Vice-President of the European Commission Margaritis Schinas said Chinese-built cars were benefiting from unfair levels of subsidies, threatening EU producers.
The commission has reached out to Chinese authorities to discuss the said findings and explore possible ways to resolve the issues identified.
The announcement of the tariffs led to a drop in the shares of European carmakers, many of whom rely on sales in China for a significant portion of their revenue.
The fear of retaliatory measures from China further escalated tensions between the two economic powers.
Chinese officials labelled the tariffs as protectionist and warned of potential damage to economic and trade cooperation between China and the EU.
The China Passenger Car Association, however, downplayed the impact of the tariffs, stating that they were "within expectations and would not have a significant effect on most Chinese firms."
The association's secretary-general highlighted the potential for Chinese EV manufacturers like Tesla, Geely, and BYD to expand their presence in the European market in the future.
Despite the backlash from China, the EU stood by its decision, citing unfair subsidies received by Chinese-built cars and the subsequent threat posed to EU producers. The anti-subsidy investigation was set to continue until November, after which definitive duties could be imposed for five years.
Companies that were deemed to have cooperated with the investigation, such as Tesla and BMW, would face lower rates of around 21%, while non-cooperating firms could see duties as high as 38.1%.
Economists noted that while the immediate impact of the tariffs may be small in economic terms, the intention was to limit the future growth of EV imports from China. This move marked a significant shift in EU trade policy, as it had previously been hesitant to engage in protectionist measures similar to those enacted by the US under the Trump administration.
