The European Commission has announced plans to slap tariffs of up to 36.3 percent on Chinese-made electric cars. The move is aimed at countering what the EU perceives as unfair trade practices, including subsidies for Chinese car manufacturers. However Tesla cars made in China are to face a lower duty of 9 percent.
The revised rates were published on Tuesday as part of the Commission's investigation into alleged subsidies for imports of Chinese-made electric vehicles into Europe.
The Commission, which fixes EU trade policy, said it still believed Chinese EV production has benefited from substantial subsidies. It therefore proposed duties of between 17 and 36.3 percent on Chinese car manufacturers when they export their products to the EU.
Market leader BYD will face a 17 percent tariff (down from 17.4 percent), Geely will pay 19.3 percent (previously 19.9 percent), and SAIC the maximum 36.3 percent tariff (down from 37.6 percent).
Other Chinese producers that have cooperated with Brussels in their investigations will see a tariff of 21.3 percent, slightly up from the 20.8 percent proposed earlier.
Those that are not cooperating will face the full 36.3 percent duty.
EU to slap punitive tariffs on Chinese electric cars, risking trade war
Tesla's lower rate
Elon Musk's Tesla, which manufactures its Model 3 and Model Y in China, has secured a lower tariff of 9 percent.
The company argued it received fewer Chinese subsidies compared to local manufacturers.
European carmakers with joint-venture factories in China – such as Peugeot Citroen and BMW – are among the fiercest critics of the new tariffs.
Since the 1980s, those companies have outsourced production to cut costs.
The EU has allowed for "certain joint ventures with EU producers" to benefit from reduced duties, meaning companies like Dongfeng Peugeot Citroen Automobile Company will pay 21.3 percent on imports.
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China strikes back
The Chinese Ministry of Commerce has criticised the EU’s tariffs as "protectionist" and lacking evidence, and vowed to take necessary measures to protect Chinese businesses' rights and interests.
On Wednesday, the China Association of Automobile Manufacturers (CAAM) expressed its firm opposition to the revised punitive tariffs saying they brought "enormous risks and uncertainty" for China's operations and investment in the EU.
China has responded by launching its own investigation into EU subsidies for dairy products.
As from 21 August 2024, the probe will focus on imported dairy items including fresh cheese, curd, blue cheese, milk, and cream.
The investigation into EU dairy subsidies could lead to new import duties, though exact figures have not yet been specified.
The trade dispute underscores escalating tensions between the EU and China, impacting both the automotive and agricultural sectors.
The final tariffs still need to be approved by EU member states before 30 October.
