EU Imposes Up to 35.3% Tariff on Chinese Electric Vehicles! Local European Manufacturers Under Huge Pressure

According to CCTV News, the European Commission announced on October 29 local time that it has concluded the anti-subsidy investigation into electric vehicles (BEV) imported from China and decided to impose final anti-subsidy duties for a period of five years. The decision will take effect on October 31.

Among the sampled Chinese export producers, BYD will be subject to a 17.0 percent tax, Geely 18.8 percent, SAIC 35.3 percent, and other partner companies will be subject to a 20.7 percent tariff. Tesla will be subject to a 7.8 percent tariff after requesting an individual review. All companies that do not cooperate are subject to a 35.3% tariff. It is worth noting that from July 4, 2024, the temporary tariffs on electric vehicles imported from China will no longer be enforced.

In this regard, the spokesperson of the Chinese Ministry of Commerce said that China has repeatedly pointed out that the EU's anti-subsidy investigation into China's electric vehicles is unreasonable and non-compliant, and believes that this is a real protectionist act of "unfair competition" in the name of "fair competition". China disagrees with and does not accept the ruling, and has filed a lawsuit under the WTO dispute settlement mechanism. China will continue to take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises.

So why does the EU insist on imposing tariffs on Chinese electric cars? The German "Manager magazine" reported on October 30 that the European Union found in a survey that Chinese electric vehicle manufacturers have a clear advantage in the European market, and their products are usually about 20% cheaper than locally produced models in the EU. The European Commission therefore believes that countervailing duties are necessary to secure the long-term future of the EU automotive industry. Whether such protectionist measures are actually effective, however, is still a matter of debate.

German Transport Minister Volker Wiesing has warned the EU that "market barriers" are not an appropriate means to enhance the competitiveness of Germany or the European car industry. He stressed that the future viability of the automotive industry will depend on the ability to offer electric vehicles at competitive prices.

Obviously, although in the name of "protecting the local market", countervailing duties may temporarily reduce the survival pressure of European local electric vehicle manufacturers, but in fact, it may lead to local enterprises in the "honey trap" and slow down the development rate. In addition, the imposition of tariffs will directly lead to an increase in the cost of car purchases, which will lead to a downturn in the electric vehicle consumer market, which is not conducive to the promotion and development of the electric vehicle industry. Such short-sighted decision-making is clearly not a long-term solution.

Within the EU, too, there is opposition. In a vote earlier this month, the number of EU member states opposing countervailing duties on Chinese electric vehicles exceeded the combined support and abstentions. Analysts believe this shows that the anti-subsidy investigation launched by the European Commission does not have broad support, but only on the basis that EU rules of procedure have not been overturned.

Germany, an important member of the European Union, voted against the vote. On October 21, German Chancellor Scholz once again made clear his opposition to the imposition of tariffs on Chinese electric vehicles, and stressed that such trade protectionism will only hurt Germany itself. Nevertheless, some EU countries are sticking to their guns, making the situation unmanageable.

German public opinion on the final countervailing duty decision also continued to voice opposition. A spokesman for the German Economy Ministry said Germany supports the ongoing EU-China talks and hopes to ease trade tensions through diplomatic means. Germany is committed to keeping its markets open because, as a globally connected economy, it depends on it.

Hildegard Mueller, president of the German Association of the Automotive Industry, said in a statement that the EU's tariffs on imported electric vehicles from China are a step backward for global free trade and have a negative impact on prosperity, jobs and economic growth in Europe. Mueller warned that such a move could heighten the risk of a trade conflict and ultimately hurt the entire industry.

The German media "Der Spiegel" reported on October 30 that the EU imposed countervailing duties on electric vehicles imported from China, which is a risk for German consumers and car manufacturers. China is the world's largest auto market, and German automakers such as Volkswagen, Mercedes and BMW not only produce cars locally for the Chinese market, but also produce car products for export. In future, all carmakers producing in China will have to pay anti-subsidy duties on their imports into the EU, including the German carmakers mentioned above. For example, a maximum tax rate of 35.3% will be applied in the future for joint production between Volkswagen and SAIC. For now, Mercedes expects the decision to impose countervailing duties on China to have a negative impact on the European automotive industry - "punitive tariffs can harm the long-term competitiveness of an industry"; A BMW spokesman said it was a "fatal signal for the European automotive industry".