The EU wants to make Chinese electric cars more expensive – DW – 06/12/2024

The EU Commission is threatening to do what the German government and other European governments want to prevent: punitive tariffs will be applied to electric cars made in China from July 4, to protect the electric cars of European automakers and in response to “unfair subsidies” in China. The EU is therefore following the lead of the US, which is now imposing import duties on all electric vehicles coming from China.

Tesla and Chinese manufacturers and victims

The EU will levy different levels of tariffs depending on the extent to which Chinese companies cooperate with EU investigations. In the most extreme case, a tariff of 38.1 percent will be applied. Added to this is the usual 10 percent import duty that already exists on all cars coming from China. Total 48.1 percent.

The world’s largest manufacturer, Build Your Dreams (BYD), will also have to pay a penalty fee of between 17 and 20 percent. American manufacturer Tesla will also be affected, as it produces cars in Shanghai which it then exports to Europe.

Deadline: July 4th.

EU Commission Vice-President Margaritis Schinas said the Commission had “established contacts with the Chinese authorities to discuss possible solutions.” Only if these negotiations, scheduled under World Trade Organization (WTO) rules, fail before July 4, will tariffs be raised temporarily.

The EU’s 27 trade ministers will have until November 2 to vote on the taxes. Sweden, Hungary, the Czech Republic, Slovakia and Germany reject punitive tariffs on cars from China. France and Spain, however, are pushing for tariffs to protect their domestic producers from cheap competition.

Germany is against new tariffs

Chinese electric cars are on average 20 percent cheaper than those produced in Europe. The German government fears an undesirable reaction from China and that it will end in a real trade war. “Electric cars should become cheaper in Europe through increased competition, open markets and significantly better EU placement conditions, not through trade wars and closed markets,” said German Transport Minister Volker Wissing of the liberal FDP party.

China’s reaction was immediate: Chinese Foreign Ministry spokesman Lian Jian said in Beijing that the EU was violating international trade rules and the principles of a market economy. “Protectionism has no future. Open cooperation is the right way,” said Lian Jian.

China currently imposes a 15 percent import tariff on electric vehicles from Europe. In the future, this figure may increase sharply. Repression in other sectors of the economy cannot be ruled out.

The Association of European Automobile Manufacturers in Brussels supports the punitive tariffs sought by the EU. Association director Sigrid de Vries emphasizes that Europe must have a strong industrial strategy for electromobility, access to the necessary raw materials, cheap energy and a comprehensive charging and refueling network for electricity and hydrogen.

What impact do tariffs have?

The Kiel Institute for the World Economy estimates that around 500,000 electric vehicles would have been exported from China to Europe this year. Tariffs could cut that figure by a quarter, to 375,000. This gap could probably be filled if European producers sold more in Europe rather than exporting around the world. The supply shortage could lead to an overall increase in prices for car buyers.

On the other hand, the EU criticizes the US’s isolationist trade policies, as the US government’s punitive tariffs on Chinese cars have led to increased import pressure on the EU. The issue of sanctions will likely be discussed at the G7 summit next Thursday (13/6-15/6) in Borgo Egnazio, Italy.

(RMR/ms)