According to a Reuters report on June 10, the European Commission is expected to announce plans this week to impose tariffs on Chinese electric vehicles due to concerns over excessive subsidies from the Chinese government. This move could provoke strong criticism and countermeasures from China.
Previously, the United States raised tariffs on Chinese electric vehicles to over 100%, more than four times the current rate. Now, the EU is set to impose import tariffs on Chinese manufacturers like BYD and Geely, as well as Western manufacturers such as Tesla that export cars from China to Europe. However, these tariffs are likely to be much lower than those set by the US.
The EU is expected to implement temporary tariff measures by July 4 at the latest. They may also impose retroactive tariffs on cars imported up to 90 days before this date. Relevant parties will have three working days to comment on the accuracy of the Commission's calculations. The EU's investigation will continue until the end of October, at which point a decision will be made on whether to impose final tariffs, usually for a period of five years. Unless overwhelmingly opposed by EU member governments, the proposed tariffs will apply. Analysts predict the tariffs will range between 10% and 25%.
Based on 2023 trade data, for every additional 10% tariff on top of the existing 10%, EU importers of Chinese electric vehicles will incur losses of about $1 billion. This would undoubtedly be a blow to the Chinese automotive industry. As Chinese electric vehicle manufacturers expand their exports to Europe, this cost is expected to increase this year. To avoid the impact of tariffs, Chinese electric vehicle manufacturers and suppliers have already begun investing in production in Europe.
Western automakers Tesla, Renault Dacia, and BMW have been importing electric vehicles produced in China to Europe. Meanwhile, the European Commission projects that the market share of Chinese brands in the EU's electric vehicle market has risen from less than 1% in 2019 to 8%, potentially reaching 15% by 2025. Currently, models exported from China to Europe include BYD Yuan Plus (known as Atto 3 in Europe), SAIC MG, and Geely Volvo models. The European Commission states that Chinese-made models are generally priced 20% lower than those produced in the EU.
Despite this, the European automotive industry is largely against the imposition of tariffs by the EU. Executives from BMW, Mercedes-Benz, and Volkswagen have warned against imposing import taxes on cars from China. According to Reuters, executives from traditional European automakers believe that higher tariffs might temporarily reduce or eliminate the cost advantages Chinese automakers gain from the supply chain, but it will not prevent low-cost Chinese electric vehicles from continuing to capture market share in Europe. It might even force European automakers to adjust their operations. Stellantis CEO Carlos Tavares stated that European automakers "do not have much time" to adjust their operations and that Europe needs to eliminate discrepancies and uncertainties in electric vehicle policies, regulations, and subsidies across countries, while also addressing internal efficiency and flexibility issues in decision-making, execution, and innovation.
Among EU member governments, France has stated that Europe needs to protect itself from the impact of Chinese automotive production subsidies, while German Chancellor Olaf Scholz believes there is no need to impose tariffs. HSBC estimates that German automakers' profits in the Chinese market account for 20%-23% of their global profits, making them heavily reliant on sales in China and concerned about potential Chinese countermeasures.
However, European Commission President Ursula von der Leyen has repeatedly stated that Europe needs to take action to prevent Chinese-subsidized electric vehicles from flooding the EU market.
China argues that the anti-subsidy investigation does not comply with WTO rules and has strongly criticized the EU, urging cooperation and lobbying individual EU countries. Regarding tariffs, the Chinese government has maintained an open and cooperative stance, committed to maintaining the stability of global industrial and supply chains.
