The European Commission announced on Wednesday that it would impose additional duties of up to 38.1% on imported Chinese electric cars starting in July. This move risks retaliation from Beijing, which has labelled the action as protectionist.
Following Washington’s recent decision to quadruple duties on Chinese electric vehicles (EVs) to 100%, Brussels revealed its own plans to levy extra tariffs ranging from 17.4% for BYD to 38.1% for SAIC, in addition to the standard 10% car duty. This measure aims to counteract excessive subsidies.
European automakers are facing increased competition from a surge of more affordable EVs from Chinese companies. The Commission estimates that the market share of Chinese brands in the EU has grown from below 1% in 2019 to 8%, with a potential increase to 15% by 2025. Chinese EVs are typically priced 20% lower than EU-made models.
Andrew Kenningham, chief Europe economist at Capital Economics, noted that this decision marks a significant shift in EU trade policy. Although the EU frequently employs trade defences against China, it has not done so in such a crucial industry until now.
European policymakers are determined to avoid a repeat of the solar panel industry scenario from a decade ago when limited action against Chinese imports led to the collapse of many European manufacturers. The EU initiated an anti-subsidy investigation into Chinese EVs in October.
Shares of major European carmakers, many of which rely heavily on sales in China, fell due to concerns over potential Chinese retaliation. Companies like BMW, which manufactures EVs in China for the European market, will now face additional duties.
Chinese foreign ministry spokesperson Lin Jian condemned the EU’s investigation as a “typical case of protectionism,” warning that the tariffs would harm China-EU economic cooperation and disrupt the stability of the global automobile production and supply chains.
