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EU to slap extra tariffs on Chinese electric cars

BRUSSELS (AFP) – The European Union (EU) threatened yesterday to hit Chinese electric car imports with additional tariffs of up to 38 per cent from next month.

The European Commission has ordered a provisional hike of tariffs on Chinese manufacturers: 17.4 per cent for market major BYD, 20 per cent for Geely and 38.1 per cent for SAIC.

The commission said the amount depended on the level of state subsidies received by the companies.

All other electric car producers in China which had cooperated with the commission’s probe but were not sampled would face an average duty of 21 per cent, it added.

The remaining battery electric vehicles (BEV) producers which did not cooperate with the investigation would be subject to a 38.1 per cent duty.

This would be on top of the current rate of 10 per cent on all electric cars produced in China.

To halt the extra tariffs being levied, Beijing and Brussels must resolve the subsidies issue.

“The Commission has provisionally concluded that the BEV value chain in China benefits from unfair subsidisation, which is causing a threat of economic injury to EU BEV producers,” it said in a statement.

File photo shows a worker at an assembly line of a Chinese electric auto brand in Wuhan, central China’s Hubei Province. PHOTO: XINHUA

“Should discussions with Chinese authorities not lead to an effective solution, these provisional countervailing duties would be introduced,” it added.

The tariffs will apply provisionally from July 4 and then definitively from November unless there is a qualified majority of EU states – 15 countries representing at least 65 per cent of the bloc’s population – voting against the move.

China warned prior to the announcement that the tariffs would amount to “protectionism”.

“It goes against the principles of market economy and international trade rules, undermines China-EU economic and trade cooperation as well as the stability of the global automobile production and supply chain,” Foreign Ministry Spokesman Lin Jian said.

“China will take all necessary measures to firmly safeguard its legitimate rights and interests,” he said.

Brussels launched the probe last year, with officials saying they wanted to put the brakes on what they claimed were unfair practices undercutting Europe’s car manufacturers.

The EU’s tariffs, while high, are lower than the United States’ 100-per-cent rate imposed from last month on Chinese electric cars.

Not all 27 EU member states welcome the commission’s move.

Germany, Hungary and Sweden already expressed reservations about the investigation and the push to slap higher duties.

“The European Commission’s punitive tariffs hit German companies and their top products,” German Transport Minister Volker Wissing wrote on X.

“Cars must become cheaper through more competition, open markets and significantly better business conditions in the EU, not through trade war and market isolation,” Wissing said.

China is an important market for German car makers, while Hungary, which a month ago hosted a visit by Chinese President Xi Jinping, is clearing land for a BYD factory to be built next year. Geely owns Volvo, the Swedish-based auto manufacturer.

The Chinese Chamber of Commerce to the EU (CCCEU) warned the rates announced “will pose a serious market barrier” and slammed the “politically motivated and protectionism driven” investigation.

The CCCEU said the probe lacked “substantive and substantiated complaints from its domestic industry” since it was launched by the commission without a complaint from manufacturers.

Chinese media ramped up threats that Beijing could target EU exports in the weeks running before the commission’s decision.

China is an important country for EU’s agriculture sector and any move by Beijing could deliver acute pain to European exports.

EU exported dairy products worth around EUR1.7 billion (USD1.8 billion) last year, down from nearly EUR2.1 billion in 2023.

The Asian country is the third destination for the EU’s agri-food exports after Britain and the United States (US).

China is the world’s biggest car exporter and Europe is a critical market for it.

EU imports of electric vehicles from China mushroomed from around 57,000 in 2020 to around 437,000 in 2023, the US-based Peterson Institute for International Economics said.

Ahead of the EU’s move, Germany’s Kiel Institute for the World Economy said in a report that a 20 per cent tariff would mean 125,000 fewer Chinese electric cars to the EU, worth almost USD4 billion.