2024-07-04 19:11:09
The EU Commission has agreed on high punitive tariffs against electric cars from China. Despite criticism from politicians and industry. This is what the decision means.
The provisional tariffs are the result of an investigation by the EU Commission. This found that the entire value chain for electric cars in China is heavily subsidized and that imports of Chinese electric cars pose a clearly foreseeable and imminent threat to industry in the EU. According to the Commission, Chinese electric cars are usually around 20 percent cheaper than models manufactured in the EU.
Specifically, a provisional punitive tariff of 17.4 percent is being imposed on the manufacturer BYD, 19.9 percent on Geely and 37.6 percent on SAIC. Geely produces, among other things, the electric Smart models #1 and #3 as well as the Volvo EX30. SAIC builds the MG4, which is popular in Germany and which, in the registration statistics from Flensburg in May, ranks just behind the VW
The final introduction of the punitive tariffs is to take place within four months, unless China makes any surprise concessions. Until then, the tariffs do not have to be paid, only security deposits for them.
In Germany, the EU Commission’s actions are causing concern because there are fears of retaliatory measures that could primarily affect German car manufacturers. China is the world’s largest car market and, according to the Association of the Automotive Industry (VDA), was the third largest export market for cars from Germany in 2023 – after the USA and the United Kingdom. However, German companies could not only be affected by countermeasures, but also by the EU measures themselves – because some of them produce in China for export.
With a view to possible retaliatory measures by China, the Association of the Automotive Industry (VDA) recently warned that if China were to introduce import tariffs on vehicles with an engine of more than 2.5 liters, this would hit the industry hard. In 2023, around a third of the vehicles exported from Germany to China would be in this size range.
Federal Economics Minister Robert Habeck (Greens) is also pushing for a political solution by November. Germany has no interest in “there being a tariff race and the markets being fragmented as a result,” he recently stressed. China, as an export country, also has no interest in this. French President Emmanuel Macron, on the other hand, has generally been positive about punitive measures against China’s electric cars in the past.
Talks have recently taken place between Chinese Trade Minister Wang Wentao and EU Trade Commissioner Valdis Dombrovskis, among others. Whether they will lead to a settlement of the trade conflict is, however, completely unclear. The EU Commission has repeatedly stressed that a negotiation result must eliminate the influence of harmful subsidies. Talks between Brussels and Beijing are set to continue in the coming weeks.
If the authority, headed by Ursula von der Leyen, comes to the conclusion that China is not moving sufficiently, it can present a proposal to introduce definitive punitive tariffs in the next four months. The EU states could then only stop the proposed tariffs if a so-called qualified majority votes against the proposal.
Qualified majority usually means that at least 15 EU states, which together represent at least 65 percent of the total population of the Union, must agree. If there is no qualified majority for or against the proposal, the Commission can either adopt it or present a new, amended version.