The European Commission is imposing punitive tariffs on certain electric cars from China. The EU Commission announced on Wednesday that models from BYD, Geely and SAIC were affected. An import tariff of 17.4 percent should apply to BYD, 20 percent to Geely and 38.1 percent to the state-owned Chinese Volkswagen partner group SAIC. All other companies that import electric cars from China into the EU must pay 21 percent . This affects the American manufacturer Tesla as well as European manufacturers, especially BMW. So far, a 10 percent tax has been charged on imported electric cars from China. According to the information, whether the duties actually have to be paid depends on whether another solution can be found with China. They would then be withheld retroactively from July 4th if the EU agreed to impose higher tariffs in the long term. The punitive tariffs now announced are at the upper end of the expected rates. They are levied in addition to the standard tariff rate of 10 percent. The EU is following the USA and Turkey, which recently announced tariffs of 100 percent and 40 percent on Chinese electric cars. The basis for the punitive tariffs is an anti-subsidy procedure that the Commission initiated in the fall of last year. The Commission emphasizes that – unlike the USA – it is acting in accordance with the rules of the World Trade Organization. Accusation of market distortion The EU accuses China of granting high subsidies to the car manufacturers based there along the entire supply chain and thus the market in the EU to distort. At first glance, the import figures are not dramatic. The share of electric cars imported from China in the EU was 7.9 percent in 2023. However, it has recently risen sharply and could rise to 15 percent by 2025, the commission fears. On average, the prices of Chinese electric vehicles in the EU are 20 percent lower than those manufactured in Europe. The tariffs will take effect from July 4th at the latest. They would then also be collected retroactively for the period up to three months previously. Brussels then has another four months to impose definitive tariffs. Unlike the provisional tariffs, the member states could then object to this, even if only with a qualified majority. The Commission could also suspend the imposition of the tariffs if Beijing submits proposals as to how it wants to remedy the situation. The Commission mentions targeted export restrictions as a solution. However, a quick solution is not considered likely.Criticism from the Chinese governmentThe government in Beijing reacted immediately to the announcement from Brussels on Wednesday and threatened to take countermeasures. China will “resolutely take all necessary measures to defend the legitimate rights and interests of Chinese companies,” the Chinese Ministry of Commerce said on its website. The EU has “ignored the facts and WTO rules”, as well as the resistance of many EU member states. China’s advantages in the electric car industry are the result of open competition. “China is very worried and dissatisfied.” It is a “purely protectionist act” that destroys fair competition. The People’s Republic called on the EU to “correct its wrong steps”. The tariffs would have a “certain impact on the development of Chinese companies,” said Cui Dongshu, secretary general of the Chinese automobile association CPCA, to the F.A.Z. He particularly criticized the high tariffs for the Shanghai state-owned company SAIC: “We consider these tariffs to be extremely unreasonable.” The tariffs for BYD are also “relatively unreasonable.” The Chinese electric car manufacturer Nio announced that it rejects increased tariffs and hopes so that the EU and China are still coming to an agreement. The company wants to remain loyal to Europe despite the tariffs: “Nio’s commitment to Europe’s electric car market remains unshakable and we will continue to serve our users.” China is the largest car market in the world and is therefore extremely important for German car manufacturers – German car producers would take countermeasures . 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. Porsche would also be affected if China responded with countermeasures. The huge country is one of the most important markets for Porsche and is served entirely from Europe. Audi also exports numerous vehicles to China. “We expect around 60,000 units for 2024,” the company said. German manufacturers have a high share of sales in China. At Mercedes, around 30 percent of sales last year were in China. 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. According to calculations by the management consultancy JSC Automotive Consulting, which regularly evaluates registration figures in China, only 0.6 percent of the vehicles sold there in 2023 were imported models for the VW brand. Audi came in at 9 percent, BMW at 13 percent and the Mercedes-Benz Group at 20 percent. At Porsche, the rate was 100 percent due to a lack of local production. A bitter price war has been raging among electric car brands in the “Middle Kingdom” for some time. German brands want to take on competitors such as the American car manufacturer Tesla and Chinese brands such as BYD and Nio. BMW, Mercedes, VW and other companies could be the first target of possible Chinese countermeasures. On May 22nd, the Chinese Chamber of Commerce in Brussels warned of this possibility. It had been informed by “insiders” that China was considering imposing tariffs of 25 percent on imported vehicles with large engines, according to a statement from the chamber on X. France was previously considered the driver of punitive tariffs on Chinese electric cars. They would improve the competitive position on the European home market, and since the manufacturers Renault and the Stellantis Group, which is heavily influenced by France, have practically no business in China, they would hardly have to fear a counterattack from Beijing, unlike their German competitors. But recently there have also been warnings about punitive tariffs from French industry. Stellantis boss Carlos Tavares spoke in May of a “trap” that they were in danger of falling into, after all, tariffs ultimately made electromobility, which is already only partially affordable, even more expensive. “As a global company, Stellantis believes in free and fair competition in a global trading environment and does not support measures that contribute to the fragmentation of the world,” a Stellantis spokesman said on Wednesday. This position is of course also explained by the new cooperation The multi-brand group has entered into a deal with the Chinese electric car manufacturer Leapmotor, whose vehicles it wants to sell in Europe in the future. Trade barriers would be harmful. The Renault Group, which has joined forces with the Chinese manufacturer Geely in the combustion engine business and also wants to partially develop the new electric Twingo in China, does not want to take a position on the customs issue. More on the topicGerman companies could not only be affected by countermeasures, but also by the EU measures themselves – because they also produce in China for export. Mini, for example, is building the electric Cooper, which was launched on the global market in May, together with the Chinese car manufacturer Great Wall in China. In the VW Group, only the new Cupra Tavascan, which is scheduled to come onto the market in autumn, could be affected. It is the first and only model in the group to be built in China and exported to Europe. BMW imports the iX3 from China to the EU. Mercedes, together with its major shareholder Geely, builds the Smart vehicles entirely in Xi’an, China, and also exports them to Europe. America has been increasing the tariff for a long time. The EU’s move follows similar measures from the USA. In mid-April, the Americans imposed special tariffs on imports of electric cars, semiconductors, solar cells, cranes and other products from China. The United States also accuses Beijing of distorting competition through significant government subsidies. Cheap Chinese products would be specifically directed to the USA and Europe. Beijing denies this and argues that the industries are driven by innovation and that China would thus contribute to the fight against climate change. In 2023, China exported 1.2 million cars, according to state media – almost 78 percent more year-on-year. In Germany, according to data from the Federal Motor Transport Authority, the number of newly registered vehicles from China rose by 47.6 percent in 2023 compared to the previous year. In terms of numbers, however, Chinese cars, with 33,699 units, were far behind the competition from other countries. China’s electric car giant BYD is currently expanding its transport routes to Europe and is building a factory in Hungary, which would also be a gateway to the EU market without the lengthy transfer across the sea.
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In principle, many business representatives fear that mutual punitive tariffs could escalate into a trade war. The Ministry of Commerce in Beijing recently initiated an anti-dumping investigation into chemicals from the EU, the United States, Japan and Taiwan. If products are artificially made more expensive by high tariffs, trading is often no longer worthwhile. As a result, it is not only the companies directly affected by the tariffs that suffer. Such a situation can also have a negative impact on suppliers and logistics companies, for example.
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