Competition - EU introduces provisional punitive tariffs on e-cars from China
The EU is imposing provisional tariffs on the import of electric vehicles from China starting this Friday, according to the EU bulletin. The tariffs affect companies such as BYD, which is currently heavily sponsoring the Football European Championship.
The provisional tariffs are the result of an investigation by the EU Commission. The investigation revealed that the value chain for electric vehicles in China is heavily subsidized, and the importation of Chinese electric vehicles poses a clear and imminent threat to the industry in the EU. Chinese electric vehicles are normally around 20% cheaper than those produced in the EU, according to EU statements.
Specifically, BYD faces a provisional tariff of 17.4%, Geely 19.9%, and SAIC 37.6%. Geely produces electric models such as the Smart #1 and #3, as well as the Volvo EX30. SAIC manufactures the popular MG4 in Germany, which ranked second in electric car registrations in Flensburg in May, just behind the VW ID.3. Other manufacturers are subject to 20.8% tariffs, and companies that did not cooperate in the investigation face a tariff of 37.6%.
The final implementation of the tariffs is expected to take place within the next four months, unless China makes unexpected concessions. Until then, the tariffs do not need to be paid but only security deposits for them.
Concerns over countermeasures
The EU Commission's actions are causing concerns in Germany, as there is a fear of retaliatory measures that could primarily affect German car manufacturers. China is the largest automotive market in the world and, according to the German Automobile Industry Association (VDA), was the third-largest export market for German cars in 2023 - after the USA and the United Kingdom. German companies could be affected not only by retaliatory measures but also by the EU measures themselves, as they produce some vehicles in China for export.
The VDA recently warned that if China were to introduce import tariffs on vehicles with engines larger than 2.5 liters, this would significantly impact the industry. Approximately one-third of the cars exported from Germany to China fell into this category in 2023.
Bundeswirtschaftsminister Robert Habeck (Greens) is therefore urging a political solution by November. Germany has no interest in "a race of tariffs and markets becoming fragmented," he recently emphasized. China, as an exporting country, also has no interest in this. French President Emmanuel Macron, on the other hand, had previously expressed a fundamental positive attitude towards trade sanctions against Chinese electric vehicles.
Negotiations between Brussels and Beijing are ongoing.
Discussions have recently taken place between Chinese Trade Minister Wang Wentao and EU Trade Commissioner Valdis Dombrovskis. Whether they will lead to a resolution of the trade conflict is, however, completely open. The EU Commission has repeatedly emphasized that any negotiation outcome must eliminate the influence of harmful subsidies. Discussions between Brussels and Beijing are expected to continue in the coming weeks.
If the Commission under the leadership of Ursula von der Leyen comes to the conclusion that China has not made sufficient progress, it can submit a proposal for the introduction of definitive tariffs within the next four months. The EU states could then only prevent the proposed tariffs from being implemented if a so-called qualified majority opposes the proposal.
A qualified majority generally means that at least 15 EU states must agree, representing at least 65% of the Union's total population. If neither in favor nor against the proposal achieves a qualified majority, the Commission can either adopt it or submit a new, amended version.
- The EU Commission's investigation revealed issues with subsidies in the Chinese electric vehicle value chain, potentially impacting companies like BYD in Flensburg.
- Geely International, with models like the Smart #1 and #3, and Volvo, a SAIC subsidiary, are also affected by the EU's provisional tariffs on Chinese electric vehicles.
- The EU Bulletin announced tariffs starting this Friday, affecting the import of vehicles from BYD, heavily sponsoring the European Football Championship.
- German companies exporting to China, including VW, could face challenges from retaliatory measures due to the EU's tariffs on Chinese electric vehicles.
- Chinese Trade Minister Wang Wentao and EU Trade Commissioner Valdis Dombrovskis recently discussed the ongoing trade conflict between Brussels and Beijing, aiming to resolve the issue.
- Prominent leaders, such as German Bundeswirtschaftsminister Robert Habeck, emphasize the need for a political solution to prevent a race of tariffs and fragmented markets.
- In 2023, around one-third of the cars exported from Germany to China had engines larger than 2.5 liters, a potential target for import tariffs from China.
- Negotiations between Brussels and Beijing could result in the elimination of harmful subsidies, aligning with the EU Commission's stance, but the outcome is currently uncertain.
- If the EU Commission concludes that China has not made sufficient progress, it can submit a proposal for definitive tariffs within the next four months.
- The EU's proposed tariffs on Chinese electric vehicles have led to concerns in Europe and the broader international automobile industry, impacting manufacturers like VW, Volvo, and BYD.
