European Commission announces tariffs on electric vehicles made in China, swift reaction follows

The European Commission plans to introduce import tariffs on electric vehicles manufactured in China with state support. The tariffs vary between carmakers and groups, ranging from 17,4 % to 38.1 %. The Commission officially announced the preliminary information on Wednesday, 12 June. China’s response was swift. Paradoxically, European carmakers had warned against import tariffs into the EU, as the Chinese market is important to them and they often have production plants there.

In September last year, the Commission announced that it was launching an investigation into Chinese state subsidies in the electric mobility sector. In its view at the time, these subsidies enabled, and continue to enable, the prices of locally manufactured vehicles to be kept artificially low, distorting the market and creating a competitive advantage. Paradoxically, European carmakers warned against the tariffs and expressed surprise that such a plan had not been sufficiently discussed with them.

The outcome of the investigation is nevertheless already known. Put simply, the investigation concluded that Chinese state support is unfair, benefiting carmakers that produce their vehicles in China. It should be noted that the wording deliberately does not refer to Chinese carmakers. The tariffs do not apply only to Chinese carmakers.

“When our partners break the rules, we will enforce our rights,” said European Commissioner Valdis Dombrovskis.

As already mentioned, import tariffs vary depending on the carmaker or group. The highest import tariffs are to be imposed on SAIC Group (formerly Shanghai Automotive Industry Corporation), which includes the popular MG brand in the Czech market, at 38,1 %. The tariff on Chinese brand Geely will be 20 %, and on BYD 17 %.

Tariffs will also affect Western brands

Western car brands will not escape the tariffs either. Tesla, Dacia and BMW will face a 21% import tariff. The tariffs are due to enter into force on 4 July 2024, although this is still only preliminary information from the Commission.

According to sources familiar with the situation, the Commission’s intention is to trigger a dialogue with its Chinese counterparts. This could still change the level of the tariffs. A final decision is due by November this year at the latest.

China reacted to the preliminary information almost immediately, as expected. Chinese representatives said that the EU was weaponising trade and that the move would strongly affect mutual relations and future cooperation. Like EU representatives, they said they would pursue and defend their interests, and called on the Commission to engage in dialogue.

The fact remains that China has invested many times more in clean mobility in recent years than the EU, which has lagged behind in developing both the overall market and the necessary infrastructure.

Last year, 19,5 % of electric cars sold in the EU came from China, according to Euractiv. This figure also includes Western brands. Sales of vehicles from BYD and MG are expected to continue rising this year.