EU hits Chinese-made EVs with higher tariffs

The European Union (EU) has decided to increase its tariffs on Chinese-made EVs to as much as 45.3%, looking to thwart the market penetration of Chinese automakers’ lower cost electric vehicles in Europe.

News of the stiffer tariffs follow a trade investigation that has divided Europe and drawn staunch opposition from China.

The details: The EU tariffs – which were approved on Tuesday, Oct. 29, and took effect on Wednesday, Oct. 30, – include the following on EVs:

• Extra tariffs ranging from 7.8% for Tesla to 35.3% for China’s SAIC Motor.

• The extra tariffs will be imposed on top of the EU’s 10% car import duty.  

Digging deeper:  The European Commission, which oversees EU trade policies, contends that Chinese automakers have an unfair advantage in Europe due to subsidies, including preferential financing and grants as well as land, batteries, and raw materials at below market prices. 

• According to the Commission, China’s spare production capacity of 3 million EVs annually is twice the size of the EU market.

Lines drawn: As expected, China has been very vocal about its opposition to the higher tariffs, with affected parties making strong statements about the hikes, putting the EU on notice. 

• China’s commerce ministry said that Beijing hopes to find a “solution acceptable to both sides as soon as possible to avoid escalating trade friction.” 

• The China Chamber of Commerce expressed its disappointment in the tariffs, calling them “protectionist” and “arbitrary.”

• China’s SAIC Motor plans to file a lawsuit at the European Union’s Court of Justice to protect its rights and interests, following the announcement of the higher tariffs.

China’s contentious position with the EU over the higher EV tariffs could impact China’s ongoing probe into imports of EU brandy, dairy, and pork products.   

Why it matters: As Chinese EV companies look to ramp up their global expansion plans, the evolving dynamics in the EU could provide insight on the challenges the U.S. auto industry might face in working to temper the Chinese automakers’ efforts to enter the U.S. market.

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