NewsEU to impose temporary tariffs on Chinese electric cars

EU to impose temporary tariffs on Chinese electric cars

President of the European Commission Ursula von der Leyen
President of the European Commission Ursula von der Leyen
Images source: © Getty Images | NurPhoto
Malwina Gadawa

4 July 2024 14:06

The European Commission will impose temporary tariffs on Chinese electric cars starting Friday due to Beijing's unfair subsidisation of this sector. If member countries do not voice any objection within four months, the EU may make these tariffs permanent in the autumn of this year.

The decision to impose temporary tariffs was published Thursday in the EU Official Journal. The document is over 200 pages long and is the most extended decision in EU history.

EU tariffs on electric cars from China

The European Commission decided to impose individual tariffs on three Chinese companies under investigation: BYD (17.4%), Geely (20%), and SAIC (38.1%). Other companies manufacturing electric vehicles in China, which cooperated in the investigation, will be subject to an average rate of 21%. This also applies to European companies that produce in China and export to the EU. This will add to the currently existing EU tariffs on electric vehicles of 10%.

On 12 June, the European Commission announced tariffs on Chinese electric cars and has since held talks with the Chinese side. However, these talks did not result in an agreement, and Brussels issued its decision on Thursday. Beijing announced retaliation. According to the Chinese Chamber of Commerce at the EU, China has ready countermeasures. In January, China launched an anti-dumping investigation regarding the import of wine from the EU.

EU tariffs are temporary. The decision to make the tariffs permanent will be up to the member countries and will be made within the next four months. A vote by the capitals may take place in October. The tariffs will not take effect if a qualified majority votes against them (55% of countries, practically 15 out of 27 countries, representing 65% of the EU population). In the coming weeks, a non-binding vote will also be conducted among the capitals, which the European Commission may or may not consider. Brussels also announces continuing talks with the Chinese side, including vehicle manufacturers. As a result, the permanent tariff rate may differ from the temporary one.

The European Commission will not collect temporary tariffs in cash. For now, the manufacturers affected by the tariffs must present bank guarantees at the borders for their value. The Commission will collect cash once the EU implements the tariffs permanently, which could happen at the beginning of November. The tariffs will fund the EU budget. However, if the EU decides to withdraw from imposing tariffs on Chinese electric cars, the guarantees will expire.

The EU responds to Beijing's actions

The tariffs imposed by the European Commission are compensatory. They aim to level the playing field in the market between subsidised Chinese companies and European electric vehicle manufacturers. Therefore—as the European Commission emphasises—the rates in effect from Friday reflect the amount of public assistance the Chinese government provides to electric vehicle manufacturers. The European Commission stresses that the goal is to protect the European industry and avoid a situation similar to the photovoltaic panel market, which has been dominated by Chinese manufacturers, practically pushing European ones out.

China is the world's largest manufacturer of electric vehicles. Last year, its global exports increased by 70%, reaching a value of £27 billion. The EU is the largest recipient of electric vehicles from China, accounting for nearly 40% of its exports.

In 2023, EU countries purchased Chinese cars worth £3 billion—almost 40% more than the previous year.

American car manufacturer Tesla has requested an individual rate, which the European Commission will review before the tariffs become permanent. Currently, Tesla is subject to a 21% rate.

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