The European Commission has recently announced its decision to impose additional tariffs on Chinese electric vehicles (EVs) in response to the findings from an anti-subsidy investigation. As per the preliminary results, the Commission has identified distortions in prices resulting from Chinese state support, leading to the imposition of tariffs of up to 38% on Chinese EVs.
One of the key concerns highlighted in the investigation is the “unfair subsidisation” of the battery electric vehicle (BEV) value chain in China, which is deemed to pose a significant threat of economic harm to EU BEV producers.
The new tariffs will apply specific rates to different original equipment manufacturers (OEMs). For example, BYD will face an additional tariff of 17.4%, Geely 20%, and SAIC 38.1%, if no agreement is reached with Chinese authorities to resolve the subsidisation issue. Tesla may also receive an individually calculated duty rate once definitive tariffs are imposed.
The tariffs will not only impact Chinese BEV OEMs but will also affect all brands, including European ones such as BMW, Volkswagen, Mini, Polestar, Volvo, and Dacia. The affected parties, including VW Group, which is in a joint venture with SAIC, have responded to these developments.
The investigation, which was initiated in October last year, is expected to conclude within 13 months. Provisional countervailing duties may be published by July 4, and definitive measures are set to be imposed within four months of the imposition of the provisional duties.
Upon announcing the tariffs, the EU Commission stressed that the sampled companies have been provided with their individual calculations and have the opportunity to contest the findings. The Commission has also stated that it would revise its calculation if evidence is presented to counterbalance its findings, in line with EU law.
Margaritis Schinas, vice-president of the EU Commission, emphasized the negative impact of unfair subsidisation on EU BEV producers. Meanwhile, Valdis Dombrovskis, executive vice-president of the EU Commission, highlighted that the decision is based on clear evidence and in full respect of WTO rules.
If the provisional tariffs are imposed, the EU stands to gain more than €2 billion ($2.165 billion) annually. However, there are concerns that this move could lead to a trade war with China and potential countermeasures against EU imports. A spokesperson for the ECG expressed the disruptive effects of punitive tariffs, urging for a swift agreement to ensure clarity.
Furthermore, several governments, including those of Germany, Sweden, and Hungary, have voiced their disapproval of the tariffs. The German chancellor, Olaf Scholz, recently warned of the negative impact of customs barriers on the economy.
This decision from the EU follows similar actions by the US government, which announced increased import duties on EVs from China, and Turkey, which has set a 40% additional tariff on Chinese vehicle imports from 2024. These measures are all aimed at addressing concerns about the impact of Chinese vehicle imports on domestic markets and industries.