EU imposes tariffs of up to 38% on Chinese electric vehicles

Volkswagen, Europe’s biggest carmaker, warns extra duties will not strengthen Europe’s auto industry.

The European Union has imposed extra duties of up to 37.6 percent on imports of electric vehicles (EVs) made in China, the bloc announced, despite Beijing’s warnings the move would unleash a trade war.

The European Commission said on Thursday that the tariffs were put in place because of “unfair” state subsidies and will kick off on Friday.

There is, however, a four-month window during which the tariffs are only provisional and talks are expected to continue between the two sides.

The Commission, the EU’s executive, launched an investigation last year into Chinese EV manufacturers on whether state subsidies were unfairly undercutting European carmakers.

After four months, when the probe concludes, the Commission could propose “definite duties” that would apply for five years and on which the 27-member bloc would vote.

The move raises duties from the current level of 10 percent as trade spats widen between the EU and China, especially focusing on green technologies.

The provisional duties of between 17.4 percent and 37.6 percent, without backdating, are designed to prevent what Commission President Ursula von der Leyen has said is a threatened flood of cheap EVs built by state subsidies.

The Chinese government has previously said it would take “all necessary measures” to safeguard the country’s interests, which could include retaliatory tariffs on exports to China of products such as cognac or pork.

The United States has already hiked customs duties on Chinese EVs to 100 percent, while Canada is considering similar action.

“There is still a four-month window before arbitration, and we hope that the European and Chinese sides will move in the same direction, show sincerity, and push forward with the consultation process as soon as possible,” said He Yadong, a spokesperson for China’s Ministry of Commerce.

The duties on Chinese manufacturers include 17.4 percent for BYD, 19.9 percent for Geely and 37.6 percent for SAIC, the EU said.

Companies deemed by the EU to have cooperated with the antisubsidy investigation, including western carmakers Tesla and BMW, will be subject to 20.8 percent tariffs and those that did not cooperate a rate of 37.6 percent.

The Commission has estimated Chinese brands’ share of the EU market has risen to 8 percent from below 1 percent in 2019 and could reach 15 percent in 2025.

It said prices are about 20 percent below those of EU-made models.

Volkswagen, Europe’s biggest carmaker, slammed the proposed tariffs and warned they would not strengthen Europe’s car industry in the long term.

“The negative effects of this decision outweigh any benefits for the European and especially the German automotive industry,” a Volkswagen spokesperson said in a statement.