The European Union is expected to impose tariffs on electric vehicle imports from China by Thursday, after negotiations between Brussels and Beijing failed to find an amicable solution to their trade dispute .
Electric vehicles have become a major point of contention in a broader trade conflict over the influence of Chinese government subsidies on European markets and Beijing’s growing exports of green technology to the European Union.
European Commission Executive Vice-President Valdis Dombrovskis spoke of proportionate and targeted measures having been adopted after a rigorous investigation.
The tariffs would remain in effect for five years unless an amicable solution is found.
According to the Commission, which manages trade disputes on behalf of the 27 EU member countries, sales of electric cars made in China increased from 3.9% of the electric vehicle market in 2020 to 25% in September 2023, in partly due to industrial prices unfairly lower than those practiced in the EU.
Tariffs on Chinese manufacturers will be 17% on cars made by BYD, 18.8% on those of Geely and 35.3% on vehicles exported by Chinese state-owned SAIC. Geely owns brands such as Polestar and Volvo in Sweden, while SAIC owns Britain’s MG Group, one of Europe’s best-selling electric vehicle brands.
Other electric vehicle makers in China, including Western companies like Volkswagen and BMW, would face tariffs of 20.7%. The Commission set an “individually calculated” rate for Tesla at 7.8%.
The EU’s punitive duties have been opposed by Germany, which is Europe’s largest economy and home to major automakers.
The president of the German automobile industry association, VDA, argued that the imposition of these customs duties constituted “a setback for global free trade and therefore for prosperity, the preservation of jobs and the growth of Europe”. Hildegard Müller said the move increased the risk of a large-scale trade conflict.
“The industry is not naive in its relations with China, but the challenges must be resolved through dialogue,” Müller said in a statement.
The Commission says China has increased its market share in the EU through subsidies along the production chain. These range from cheap land for factories provided by local governments, to discounted supplies of lithium and batteries from state-owned companies, to tax breaks and easy financing from state-controlled banks. .
The rapid growth of China’s market share has sparked concerns in the EU that Chinese cars will eventually threaten the EU’s ability to produce its own green technology to combat climate change. Business groups and unions also fear that the jobs of 2.5 million auto industry workers are at risk, as well as those of an additional 10.3 million people whose jobs indirectly depend on the production of electric vehicles.
