It had been a long wait for a decision, but now the time has come: the European Commission is temporarily imposing punitive tariffs on electric cars China. The Brussels authorities announced this on Wednesday
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The decision is the preliminary result of a competition investigation against China that the Brussels authority initiated at the end of 2023 over allegedly illegal subsidies for electric cars. The EU Commission accuses the People’s Republic of distorting competition. An overview of the most important questions and answers.
How high are the punitive tariffs and who do they apply to?
The Chinese manufacturers were mentioned by name BYD, Geely and SAIC. BYD is threatened with an import tariff of 17.4 percent, for Geely of 20 percent and for the state-owned Chinese one Volkswagen-Partner company SAIC of 38.1 percent. 21 percent is earmarked for other manufacturers. Companies that did not cooperate with the investigation must expect a tariff of 38.1 percent. The US car manufacturer Tesla, which produces a lot in China for the European market, an individually calculated duty could be imposed upon request, it said.
What level is the customs duty currently?
The tariff rate is currently 10 percent. According to the information, the new tariffs would be added.
In which scenario do tariffs apply?
Whether the tariffs actually have to be paid depends on whether another solution can be found with China. The Commission first wants to talk to the Chinese authorities and companies. If this “does not lead to an effective solution,” the higher tariff rates could be introduced from July 4th. They could apply retroactively.
The EU’s punitive tariffs would initially only come into force provisionally at the beginning of July. The tariffs would be discussed with manufacturers and EU states by the end of October. Only then would a decision be made as to whether definitive tariffs, usually for five years, would be introduced. This would leave time for a possible agreement between Brussels and Beijing.
Why does the EU impose such penalties?
Commission President Ursula von der Leyen (65) wants to prevent China from flooding the European market with cheap electric vehicles. According to the Commission, prices are typically around 20 percent lower than models manufactured in the EU. The Commission has now provisionally concluded that the value chain for battery electric vehicles (BEVs) in China benefits from unfair subsidies, said von der Leyen. Manufacturers in the EU are threatened with damage as a result.
“The price of these cars is artificially depressed by huge government subsidies – this distorts our market.”
Commission President Ursula von der Leyen
Why are German car manufacturers against punitive tariffs on Chinese electric cars?
China is the largest car market in the world and extremely important for German car manufacturers. This means that retaliatory measures from Beijing would hit German car manufacturers. BMW for example, exports the 4 Series and 7 Series from the EU to China. The Munich-based company does not provide any information about volumes. Also Porsche would be affected. The huge country is one of the most important markets for Porsche and is served entirely from Europe. Audi has committed to exporting 60,000 vehicles to China in 2024. At Mercedes China accounted for around 30 percent of sales last year. The Wolfsburg core brand VW even sold almost 50 percent of its cars there in 2023, but serves the market almost exclusively from local production.
What does China say about the threatened tariffs?
China’s Ministry of Commerce has sharply criticized the EU’s threat of punitive tariffs on electric cars from the People’s Republic and suggested countermeasures. Beijing will closely monitor the European side’s further process and resolutely take all necessary measures to protect the rights and interests of Chinese companies, a spokesman for the authority said on Wednesday. The Chinese Chamber of Commerce had previously warned in Brussels about the possibility that China could impose tariffs of 25 percent on imported vehicles with large engines.
China’s Foreign Ministry criticized the investigation as protectionism. The EU is looking for an excuse to impose tariffs on imported cars from China, which violates international trade rules, spokesman Lin Jian said in Beijing.
How does the German auto industry react to the decision?
German car manufacturers sharply criticize the punitive tariffs and are surprised by the amount. Some had expected significantly lower punitive tariffs.
“The negative impact of this decision outweighs any benefits for the European and especially the German automotive industry.”
VW spokesman
Europe’s largest carmaker Volkswagen said: “For the current weak demand for BEV vehicles in Germany and Europe, the timing of the EU Commission’s decision is disadvantageous,” explained a VW spokesman. “The negative effects of this decision outweigh the possible benefits for the European and especially the German automobile industry.” From the VW Group, only one model from the Spanish subsidiary Cupra was affected, which was imported into Europe from China, the spokesman added.
BMW CEO Oliver Zipse (60) has also criticized the EU’s plans for tariffs on electric cars from China. That’s the wrong way. The EU Commission is thereby harming European companies and European interests,” said Zipse on Wednesday. Protectionism could set a spiral in motion; tariffs lead to new tariffs and isolation. “From the BMW Group’s perspective, protectionist measures such as the introduction of import tariffs do not help it compete in international markets.”
The President of the Association of the Automotive Industry (VDA), Hildegard Müller, spoke of a “further step away from global cooperation”. This increases the risk of a global trade conflict. “It is also a fact: countervailing duties for electric cars imported from China are not suitable for strengthening the competitiveness of the European automotive industry,” she said on Wednesday. But it is also up to China to approach Europe with constructive suggestions.
What other reactions were there?
The federal government reacted cautiously. It is good that the Commission is offering the Chinese car manufacturer further talks, said government spokesman Steffen Hebestreit in Berlin on Wednesday. “There’s still time until July 4th,” he added. “From our point of view, it would be very desirable if an amicable solution could be reached. We don’t need further trade conflicts, we need to make world trade easier.” However, it must also “remain and become fair,” emphasized the spokesman.
Federal Transport Minister Volker Wissing (FDP) made it clearer when he wrote in the short message service
How does China plan to avoid tariffs?
Chinese electric car manufacturers are planning massive investments in Europe and want to produce their vehicles locally in the future. The world’s leading electric car manufacturer BYD is planning a location in Hungary. Electric and plug-in hybrid vehicles will be built there from 2026. However, the factory plans may not be complete yet: according to a top manager, another European car assembly plant is possible.
more on the subject
Geely benefits from its subsidiary Volvo from the two existing plants in Sweden and Belgium. Because of the tariffs, models that are currently produced in China are now to be relocated to Belgium. A planned cooperation with a Polish partner to build a vehicle in Poland However, it is currently on hold. A decision is expected in the summer.