The application of new European Union tariffs on Chinese-built electric vehicles began earlier this week. The levies, which go as high as 45.3%, will be in place for the next five years. The tariffs were formally approved and published in the EU’s official journal on Tuesday, taking effect the following day, Reuters reports.
The tariff rate differs depending on the automaker. For BYD, it is 17%, while for Geely it is 18.8% and 35.3% for state-owned SAIC. When factored in, the EU’s standard 10% vehicle import duty pushes it to 27%, 28.8% amd 45.3% respectively for the three automakers. Other companies manufacturing EVs in China, including Volkswagen and BMW, would be subject to a 20.7% duty. Meanwhile, the rate for Tesla is 7.8%.
According to the European Commission, which oversees EU trade policy, the extra tariffs are required to counter what it says are unfair government subsidies granted by the Chinese government to domestic automakers, enabling them to undercut rivals in Europe on price.
The Commission estimates Chinese brands’ share of the EU market has risen to 8% from below 1% in 2019 and could reach 15% in 2025, with vehicle prices that are typically 20% below those of EU-made models helping to spur that growth.
It added that given 100% tariffs being imposed by the United States and Canada, Europe could see an influx of Chinese-made EVs. The fear is that, if nothing is done, that swell will eventually threaten the EU’s ability to produce its own green technology and threaten a large number of European jobs.
The move to impose these tariffs was not spurred by European automakers. Germany in particular has been one of the leading voices in opposing the tariffs, with many German carmakers heavily opposed to the EU measures, aware that possible higher Chinese import duties on large-engined gasoline vehicles would hit them hardest. They also fear that China could retaliate directly or in other areas.
China did not agree with or accept the ruling, which came after the EU indicated it would continue to negotiate with China on price commitments, the country’s commerce ministry said in a statement. It added that Beijing hopes to find a “solution acceptable to both sides as soon as possible to avoid escalating trade friction.”
The Commission has held eight rounds of technical negotiations with China to find an alternative to tariffs and said talks can continue to find resolve. The two sides are looking at possible minimum price commitments for imported cars and have agreed to hold a further round, although the Commission said there were “significant remaining gaps.”
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