The EU has announced it will impose an additional tariff of 25% on Chinese electric vehicles (EVs) next month, which it hopes will raise over €2bn per year for the bloc, reports the FT.
The tariffs have caused division among the new EU parliament, with Germany, Sweden and Hungary against the duty hike.
Tariffs
The bloc claims that Chinese carmakers are supported by government subsidies, making the fresh duties an attempt to level the playing field. The EU currently has 10% duties in place.
It’s estimated that €10bn in Chinese EVs were exported to the EU in 2023, with analysis by the Kiel Institute suggesting that the EU’s new measures could reduce the number of units imported by one quarter.
German objections
Fears of sparking retaliatory measures from China stopped several members from backing the move, with objections led by Germany.
German Chancellor Olaf Scholz recently took an anti-barrier stance, saying that “isolation and illegal customs barriers... ultimately just makes everything more expensive, and everyone poorer”.
Officials have suggested that Berlin may have put pressure on EU Commission President Ursula von der Leyen, who is seeking a second term. The additional duties were originally set to be 35%.
‘Competition must be fair’
Currently Chinese tariffs on European EVs sit at 15% and EU industry body the ACEA expressed support for an increase, stating that it marked a “robust industrial strategy” that would allow European EVs to be more internationally competitive.
Valdis Dombrovkis, trade commissioner for the EU, said that “competition must be fair” despite the need to make the transition away from fossil fuels. He added that there was evidence Chinese manufacturers in the sector had been the beneficiaries of unfair trade practices from the Chinese government, including subsidies and tax breaks.
The EU stated:
“The entire Battery Electric Vehicle (BEV) value chain benefits heavily from unfair subsidies in China, and that the influx of subsidised Chinese imports at artificially low prices therefore presents a threat of clearly foreseeable and imminent injury to EU industry.”
‘Protectionism has no future’
Lin Jian, China’s foreign ministry spokesperson, said the tariffs were “a typical example of protectionism” that break “market economy principles and international trade rules”.
“Protectionism has no future. Open cooperation is the right path.”
The Guardian notes that European manufacturers fear retaliation from China, which is the bloc’s third most important market for exports. Countermeasures could be implemented on EU products in the alcohol and dairy sectors.
It comes after the US increased tariffs on Chinese EVs to 100%, while other countries including Turkey have increased their own tariffs on the products as China seeks to export its way out of an overcapacity issue stoked by stalling domestic demand.
