EU slaps Chinese electric cars with tariffs of up to 38%

AFP | Brussels, Belgium

The Daily Tribune - www.newsofbahrain.com

The European Union yesterday slapped extra provisional duties of up to 38% on Chinese electric car imports because of “unfair” state subsidies, despite Beijing’s warnings the move would unleash a trade war.

A European Commission probe launched last year concluded that state subsidies for Chinese EV manufacturers were unfairly undercutting European rivals which Brussels wants to shield as they make the transition from thermal to electric power. The Chinese Chamber of Commerce to the EU slammed the tariffs, coming on top of current import duties of 10 percent, as “politically-motivated” and “protectionist”, while voicing hope the dispute could yet be resolved through dialogue.

Europeans themselves are split on the move, with Germany and its homegrown auto champions, who do significant trade with China, fearing it will do more harm than good if it leads to a clampdown on EU exports as Beijing has already threatened. German auto giant Volkswagen slammed the move as “detrimental” while the head of BMW said the tariff battle “leads to a dead end”.

France and Italy have pushed for tariffs on Chinese EVs whose market share in the EU has skyrocketed but Sweden like Germany has expressed reservations, while Hungary is outright opposed. The provisional tariffs will kick in from Friday, with definitive duties to take effect in November for a period of five years, pending a vote by the EU’s 27 member states.

“Our investigation... concluded that the battery electric vehicles produced in China benefit from unfair subsidisation, which is causing a threat of economic injury to the EU’s own electric car makers,” the EU’s trade chief Valdis Dombrovskis said. In response, the commission imposed provisional duties on major Chinese manufacturers including 17.4% for market major BYD, 19.9% for Geely and 37.6 percent for SAIC.

Other producers in China that cooperated with the EU will face a tariff of 20.8%, while those that did not cooperate would be subject to the maximum 37.6 percent duty. US tech billionaire Elon Musk’s Tesla -- which manufactures in China is the only electric automaker that has asked Brussels for its own duty rate, to be calculated based on evidence it has submitted.

Expected cut to imports

The United States has already hiked customs duties on Chinese electric cars to 100 percent, while Canada is considering similar action. But Brussels faces a delicate balancing act as it seeks to defend Europe’s auto industry the jewel in its industrial crown -- while both avoiding a damaging showdown with China and meeting its targets for slashing carbon emissions. The EU aims for Europeans to switch massively to electric vehicles as it plans to outlaw the sale of new fossil fuel-powered cars from 2035.