Authors: Philip Blenkinsop and Charlotte van Campenhout
BRUSSELS (Reuters) – The European Union will impose tariffs of up to 37.6% on imports of Chinese-made electric vehicles from Friday, EU officials said, adding to tensions with Beijing in Brussels’ biggest trade case to date.
However, the tariffs are temporary, with a four-month window, and the two sides are expected to continue intensive negotiations as Beijing threatens widespread retaliation.
The European Commission imposed temporary tariffs (not retroactive) of 17.4% to 37.6% to prevent what European Commission President Ursula von der Leyen said was the threat of a flood of state subsidies for cheap electric cars.
The rates listed in a 208-page document released Thursday are nearly identical to those announced by the commission on June 12. Minor adjustments.
Beijing later said it would take “all necessary measures” to safeguard China’s interests.
The measures could include retaliatory tariffs on products exported to China, such as brandy or pork.
EU trade chief Valdis Dombrovskis said China had no reason to retaliate.
“Our goal is … to ensure fair competition and a level playing field,” he told Bloomberg in an interview.
The EU countervailing investigation still has nearly four months to go.
Finally, the European Commission, the EU’s executive arm, can propose “clear tariffs”, usually for five years, to be voted on by EU member states.
“Negotiations with China are ongoing and, in fact, if a mutually beneficial solution emerges, we can also find a way to ultimately not impose tariffs,” Dombrovskis said.
“But it’s clear that this solution needs to address the market distortions we currently face… and it needs to be market-compliant.”
China’s Ministry of Commerce said on Thursday that the two sides have held multiple rounds of technical consultations on tariff issues so far.
Foreign Ministry spokesperson He Yadong said that we hope that Europe and China will meet each other halfway, show sincerity, and promote the consultation process as soon as possible.
The EU said on Thursday that BYD (SZ:) would face tariffs of 17.4%, Geely 19.9% and SAIC 37.6%. These are on top of the EU’s standard 10% tariff on car imports.
Companies deemed by the EU to be cooperating with the countervailing investigation, including Western automakers Tesla (NASDAQ: ) and BMW (ETR: ), will be slapped with tariffs of 20.8%, while those who are not will be slapped with a 37.6% tariff. tariff.
criticize
Europe’s largest automaker Volkswagen (ETR: ) was quick to criticize Thursday’s announcement.
“The negative consequences of this decision outweigh any benefits for the European and especially German automotive industry,” a Volkswagen spokesman said in a statement.
Auto industry executives have warned of the tariffs, fearing counter-tariffs or other measures could affect the competitiveness of their cars in China as they already struggle to keep up with a growing number of domestic rivals in the electric vehicle market.
German carmakers generated a third of their sales from China last year.
The European Commission estimates that Chinese brands’ share of the EU market has risen from less than 1% in 2019 to 8%, and may reach 15% in 2025.
EU support wavers
European policymakers are eager to avoid a repeat of the solar panel mistakes of a decade ago, when the EU took limited action to restrict Chinese imports and led to the collapse of many European manufacturers. In October last year, the European Union launched a countervailing investigation into Chinese electric vehicles.
The issue will be put to EU member states for an advisory vote in the coming weeks, the first official test of support in the European Commission case and the first trade case of its kind.
Although the European Commission launched an investigation without an industry complaint, members have been hesitant to back additional tariffs, underscoring the challenges Brussels faces in gaining support for the case.
The China Passenger Car Association said the tariffs would have little impact on most Chinese companies.
Those rates are far lower than Washington’s plan to impose 100% tariffs on Chinese electric vehicle imports starting in August.
