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The tariffs will come into effect from next month on a provisional basis
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China will retaliate and some European countries fear it will even block exports
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Member states will vote in November on the final tariffs, and whether or not they will finally be activated
The European Commission has been preparing for months what would be a notable coup in the automobile industry. Usrula von der Leyen warned in September how “subsidies on electric vehicles from China” were being investigated. Europe, he said, was open to competition, but this could not be “a race to the bottom.” Economic restrictions on Chinese electric cars seemed inevitable, and now they are definitely coming.
Tariffs on Chinese electric cars. The European Commission will notify car manufacturers today that it will provisionally apply additional tariffs on electric cars imported from China starting next month. As indicated in the official EC press release, the individual tariffs that will be applied to three large Chinese manufacturers will be:
- BYD: 17.4%;
- Geely: 20%; and
- SAIC: 38.1%.
There are other Chinese electric car manufacturers that have collaborated in the investigation and will be subject to average tariffs of 21%, while those manufacturers that did not cooperate will be subject to “residual” tariffs of 38.1%.
France and Spain in favor. The new rates have been especially defended by France – which has already removed these Chinese EV models from its aid – and Spain, and will allow billions of euros to be earned thanks to the sales of Chinese electric vehicles in Europe. Large European automobile groups such as Stellantis have long shown a strong rejection of Asian electric cars, which they believe do not compete on equal terms. China exported electric cars to the EU worth 10 billion euros in 2023, doubling its market share to 8% according to data from the consulting firm Rhodium Group cited in the Financial Times.
Germany, against. The German country, which was battling with France over these tariffs and which has a very important market niche in China for its manufacturers, has indicated that it did not approve of this measure, a position it has shared with Sweden (the Chinese Geely owns Volvo, for example. example) and Hungary.
Pressure to cancel the investigation. All of them fear Chinese retaliation, and in Germany they are trying to pressure Ursula von der Leyen, who is seeking re-election as president of the European Commission, to cancel the anti-subsidy investigation. Countries such as Czechia or Slovakia could join these opponents, while Italy, which exports food and luxury goods to China, is also concerned about the measures the country may take.
Beijing will retaliate. China, the world’s largest automobile exporter, is trying to pressure several EU countries to oppose the tariffs, which were also added to the 10% that had already been established in the past. Curiously, China applies 15% taxes on European electric cars, more than what the EU imposed until now. The future of the sector seemed to be in the Asian giant, but these tariffs can stop the unstoppable advance of its electric vehicles.
Europe will have a difficult time in China. According to European manufacturers, the consequences for their sales in China could be drastic. They fear that the Asian giant could even block their market. European brands achieved 6% of electric car sales in China in 2022. Germany, which exported 216,299 cars to China in 2023, has already noticed problems: that number was 15% less than the previous year.
The US is much tougher. The US trade war with China is also noticeable in this area. While the European Commission expected to increase tariffs by approximately 35%, in the United States these taxes are 100% for Chinese electric vehicles. Elon Musk, by the way, showed his disagreement with the tariffs… because he had no other choice.
Impact on imports. The Kiel Institute, a market analysis company, has indicated in a study cited by FT that raising tariffs by 20% on Chinese electric cars will have a clear impact on imports: it will reduce them by 25%.
And above all, more expensive cars. In that study these analysts indicated how “the decline [de las importaciones] would be largely offset by increased production within the EU and lower volumes of EV exports, which would likely translate into noticeably higher prices for end consumers.” The Euro 7 standard will also make them more expensive, and that that in the end the cars will probably pollute the same.
Market shares. Meanwhile, the European Commission expects Chinese electric cars to maintain close to 15% market share in the EU in 2025. Prices, they say, are 20% higher than those of models manufactured in the EU. Valdis Dombrovskis, EU commissioner, https://twitter.com/VDombrovskis/status/1701868568483185010 that these vehicles are key to the ecological transition, but https://twitter.com/VDombrovskis/status/1800826884281786816 today that “competition must be fair” and that they do not want to close the European market to Chinese EVs.
China helps its manufacturers too much. Data collected during the European Commission investigation reveals that Chinese manufacturers and their suppliers https://twitter.com/guillealfonsin/status/1702592015538561029?t=YM34OeNsR5dAnEEdkszRmg loans, subsidies, tax aid and very cheap land to create their facilities. Chinese Foreign Minister Lin Jian’s spokesperson explained that this anti-subsidy investigation is “a typical example of protectionism.”
In Xataka | Europe is being torn apart internally by a debate: to put tariffs on Chinese electric cars or not
