Following an anti-subsidies investigation, the European Union threatened on Wednesday ( Jun 12 ) to impose additional tariffs of up to 38 % starting next month on Chinese electric car imports, which could lead to a trade war.
By launching the investigation last year in a bid to protect Western companies, Brussels provoked China’s indignation.
Days before the statement, Beijing warned that such a move may “harm Europe’s personal interests”.
There is also opposition within the EU, with Germany, a big business partner to China, saying the tariffs may harm European businesses.
The European Commission has then ordered a temporary climb of taxes on Chinese companies: 17.4 per share for business main BYD, 20 per cent for Geely and 38.1 per share for SAIC.
According to the committee, the sum impacted the amount of state subsidies the companies received.
The agency’s investigation, which included all other electric vehicles producers in China who had cooperated but were not sampled, were subject to an average duty of 21 %, it added.
The remaining Vehicle producers who refused to cooperate with the research would be content to a 38.1 % work.
This would be in addition to the present 10 % tax rate for all Chinese electric vehicles.
Beijing and Brussels may overcome the subsidies issue in order to stop the additional taxes being levied.
The Commission has proviso concluded that unfair subsidies are being applied to China’s battery electric vehicles ( BEV ) value chain, which is putting a risk of harm to EU BEV producers, according to a statement released by the Commission.
” If conversations with Chinese regulators not lead to an effective option, these provisional competing jobs may be introduced”, it added.
The tariffs will start going into effect on July 4 and end in November, unless a qualified majority of EU states, which are 15 nations that make up at least 65 % of the population, cast a ballot against the decision.
Prior to the announcement, China warned that the tariffs would amount to “protectionism.”
According to Lin Jian, a spokesman for the foreign ministry, “it goes against the principles of the market economy and international trade rules,” which threaten China’s cooperation in economic and trade with the EU and maintains stability in the global automotive production and supply chain.
China” will take all necessary steps to firmly defend its legitimate rights and interests,” he declared.
CHINA WARNING
Brussels launched the investigation last year, with officials declaring they wanted to stop what they thought were unfair practices that were harming Europe’s car manufacturers.
The EU’s tariffs, while high, are lower than the United States ‘ 100 per cent rate imposed from last month on Chinese electric cars.
Not all 27 EU member states welcome the commission’s move.
Germany, Hungary, and Sweden have already voiced their opposition to the investigation and the push to impose higher standards.
German companies and their top products are the subject of the EU Commission’s punitive tariffs, according to German transport minister Volker Wissing in an article on X.
According to Wissing,” Cars must become more affordable through more competition, open markets, and significantly better business conditions in the EU, rather than through trade war and market isolation.”
German car manufacturers have an important market in China, while Hungary, which recently hosted Xi Jinping’s visit, is clearing land for a BYD factory to be constructed in, starting in the new year. Geely owns Volvo, the Swedish- based auto manufacturer.
The Chinese Chamber of Commerce to the EU (CCCEU) warned the rates announced” will pose a serious market barrier” and slammed the “politically motivated and protectionism driven” investigation.
Since the investigation was launched by the commission without a complaint from manufacturers, the CCCEU claimed that the investigation lacked” substantive and substantiated complaints from its domestic industry.”
RETALIATION
Chinese media ramped up threats that Beijing could target EU exports, including pork and dairy products, in the weeks running before the commission’s decision.
China is a significant member of the EU’s agricultural sector, and any action by Beijing could cause severe pain to European exports.
EU exported dairy products worth around €1.7 billion ( US$ 1.8 billion ) last year, down from nearly €2.1 billion in 2023.
After Britain and the United States, Asia is the third country to export agri-food to the EU.
The world’s largest car exporter is China, and it needs to find a way to compete in Europe.
EU imports of EVs from China mushroomed from around 57, 000 in 2020 to around 437, 000 in 2023, the US- based Peterson Institute for International Economics said.
Ahead of the EU’s move, Germany’s Kiel Institute for the World Economy said in a report that a 20 per cent tariff would mean 125, 000 fewer Chinese electric cars to the EU, worth almost US$ 4 billion.