Surging numbers: BYD EVs waiting to be shipped overseas from a port in China. The company’s cars will now face tariffs of 17.4% in Europe. — AFP
BRUSSELS: The European Commission (EC) said it will impose extra duties of up to 38.1% on imported Chinese electric cars from July, risking retaliation from Beijing which said on Wednesday it would take measures to safeguard its interests.
Less than a month after Washington announced plans to quadruple duties for Chinese electric vehicles (EVs) to 100%, Brussels said it would combat excessive subsidies with additional tariffs ranging from 17.4% for BYD to 38.1% for SAIC, on top of the standard 10% car duty.
That equates to billions of euros of extra costs for the carmakers at a time when they are struggling with slowing demand and falling prices at home, according to Reuters calculations based on 2023 European Union (EU) trade data.
European automakers, meanwhile, are being challenged by an influx of lower-cost EVs from Chinese rivals. The commission estimates their share of the EU market has risen to 8% from below 1% in 2019 and could reach 15% in 2025. It said prices are typically 20% below those of EU-made models.
Andrew Kenningham, chief Europe economist at Capital Economics, said the EU decision marked a big change in its trade policy because, although it used trade defences against China often, it had not done so for such an important industry.
European policymakers are keen to avoid a repeat of what happened with solar panels a decade ago when the EU took only limited action to curb Chinese imports and many European manufacturers collapsed.
The EU launched an anti-subsidy investigation into Chineses EVs in October.
Shares in some of Europe’s biggest carmakers which make a big portion of their sales in China, fell on fears of Chinese retaliation. Some like BMW will also now incur duties on their EVs made in China and sold in Europe.
Chinese Foreign Ministry spokesperson Lin Jian said the EU’s investigation was a “typical case of protectionism” and tariffs would damage China-EU economic cooperation and the stability of the global automobile production and supply chains.
Beijing, he said, would take all necessary measures to “firmly safeguard” its legitimate rights and interests.
The Chinese Passenger Car Association (CPCA) seemed less concerned.
“The EU’s provisional tariffs come basically within our expectations, averaging around 20%, which won’t have much of an impact on the majority of Chinese firms,” CPCA secretary-general Cui Dongshu said.
“Those exporting China-made EVs that include Tesla, Geely and BYD still have huge potential for development in Europe in the future,” Cui said.
Chinese EV makers and suppliers are also starting to invest in European production, which would avoid tariffs.
Beijing passed a law in April to strengthen its ability to hit back should the United States. or EU impose tariffs on exports of the world’s second-largest economy.
It has already launched an anti-dumping investigation into mostly French-made imports of brandy and French cognac producers are “deeply” worried about retaliation for EV tariffs, a trade body said on Wednesday.
The EU provisional duties are set to apply by July 4, with the investigation set to continue until Nov 2, when definitive duties, typically for five years, could be imposed.
The commission said it would apply an additional 21% for companies deemed to have cooperated with the investigation and 38.1% for those it said had not. The indicative tariffs are above expectations of analysts of between 10% and 25%.
Western automakers like Tesla and BMW that export cars from China to Europe were considered to be cooperating, the EU commission said, adding that Tesla, currently the largest exporter of cars to Europe from China, has requested to have a separate company-specific rate set.
The commission has still to determine whether to apply tariffs retroactively for three months, an official said.
Brussels said it had contacted Chinese authorities to discuss its findings and explore ways of resolving issues identified.
BYD declined to comment. SAIC and Geely, the two other companies investigated by the commission, and Tesla did not immediately respond to requests for comment. — Reuters
