2024-07-05 05:52:17
The European Union is imposing preliminary tariffs of up to 37.6 percent on imports of Chinese electric cars, the European Commission said on Thursday. The duties will apply from Friday 5 July. Automakers that cooperate with investigations into the impact of Chinese government subsidies will pay less. The Commission has previously stated that these will be temporary additional duties that will be levied on top of the existing 10 percent duty.
China’s Ministry of Commerce today expressed hope that an agreement could be reached in the next four months. German automaker Volkswagen has criticized the tariffs and warned that they will not strengthen the European car industry.
The Commission investigated the extent to which the Chinese government’s subsidies distort the EU market for electric car imports. It set individual tariffs, which will amount to 17.4 percent for the Chinese automaker BYD, 19.9 percent for the Geely automaker, and 37.6 percent for the SAIC automaker.
Other electric car makers in China that cooperated with the investigation are subject to a 20.8 percent tariff. The duty for other non-cooperating companies is 37.6 percent. “Compared to the rates published on 12 June, the provisional duties have been adjusted slightly downwards based on comments on the accuracy of the calculations submitted by interested parties,” the European Commission said.
“Today, nine months after the initiation of an anti-subsidy proceeding, the European Commission imposed provisional countervailing duties on imports of battery electric vehicles from China. Based on an investigation, the Commission concluded that the battery electric vehicle value chain in China benefits from unfair subsidies that for battery electric vehicle manufacturers in the EU pose a threat of economic damage,” reads the statement of the EU executive.
A spokesman for China’s Ministry of Commerce said a number of technical-level consultations had taken place between China and the EU until Thursday. “We still have a four-month window before the arbitration, and we hope that the European and Chinese sides will move in the same direction, show sincerity and move the consultation process forward as soon as possible,” the spokesman said at a press conference.
The spokesman added that China denies that it unfairly subsidizes its electric car manufacturers. He also reminded that many member states reject the current anti-subsidy measures. “China hopes that the EU will listen to the calls of member states and conduct consultations rationally and pragmatically, and avoid compensatory measures that would harm the mutual cooperation and common development of the automobile industry in China and the EU,” he said.
Analyst warning
According to an earlier Reuters analysis, any Chinese retaliation would primarily affect Mercedes-Benz, BMW, Volkswagen, Porsche and Ferrari. Beijing also launched an investigation into possible dumping by EU pork importers in June. According to Reuters, this is probably one of the possible retaliations against tariffs on electric cars. Already in January, China launched an investigation into importers of brandy from the EU, and there was also talk of a possible connection with duties on electric cars.
As previously reported by world agencies, car companies are preparing for new costs in the order of billions of dollars as a result of the introduction of tariffs. According to analysts, such a measure could slow down their European expansion.
“The timing of the European Commission’s decision harms the current weak demand for electric cars in Germany and Europe. The negative effects of this decision outweigh any benefits for the European and especially the German automotive industry,” Reuters quoted a spokesman for Europe’s largest car manufacturer, Volkswagen, as saying.
In the next two days, individual member states will vote in writing on the introduction of provisional duties, by a simple majority. However, this vote is not legally binding, it has only an advisory function. In the meantime, debates will continue with the Chinese government, as well as discussions with the individual states of the current twenty-seven countries.
The states will then vote on the final tariffs in October. Their introduction could only be blocked if a so-called qualified majority, i.e. at least 15 countries representing 65 percent of the EU population, voted against them. France, Italy and Spain, the countries in which a total of 40 percent of the EU’s population lives, have previously made it known that they would support the tariffs. According to ČTK, the Czech Republic is still discussing this issue.
Tariff war with China?
European Commission President Ursula von der Leyen has previously said that the prices of Chinese electric cars are around 20 percent lower than EU-made models due to state subsidies. According to her, there is therefore a danger that Chinese electric cars will flood the market.
Von der Leyen announced the launch of the investigation last September 13 during her State of the European Union speech. According to the Commission, the decision was based on growing concerns about the rapid export of cheap electric cars from China to the EU. It further stated that it “allows all concerned parties, including the Chinese government and exporters, to present their comments, evidence and arguments”.
Imports of electric cars to the EU rose by 90 percent last year, with 54 percent of these imports coming from China. However, most of the electric cars exported from China come from Western automakers. However, the share of more affordable Chinese brands is gradually increasing. According to an analysis by ING Bank, on the one hand, tariffs will slow down the reduction of CO2 emissions due to the unaffordability of electric cars, but they will not prevent the gradual entry of Chinese competition into the market. Chinese carmaker Nio said it may adjust the prices of its cars in Europe in response to the introduction of tariffs.