BRUSSELS: The European Commission announced plans on Tuesday to impose import duties of up to 36 percent on Chinese electric vehicles (EVs), amid ongoing disputes over state subsidies that European officials argue unfairly disadvantage local manufacturers.
The proposed tariffs, set to last for five years, aim to address concerns that Chinese subsidies have distorted competition in the European EV market.
Under the draft plan, which is subject to feedback from interested parties by the end of August and approval by EU member states by October, major Chinese EV manufacturers will face varying tariff rates.
Market leader BYD will see a slightly reduced duty of 17 percent, down from 17.4 percent; Geely will face a 19.3 percent tariff, slightly less than the provisional 19.9 percent; and SAIC will be subject to a 36.3 percent duty, a reduction from the earlier 37.6 percent.
Chinese EV producers that cooperated with the European Commission will face a revised tariff of 21.3 percent, an increase from the previous 20.8 percent. In contrast, companies that did not engage with Brussels will be hit with the maximum 36.3 percent tariff.
Tesla, the American electric car manufacturer led by Elon Musk, will benefit from a lower duty of nine percent for its vehicles made in China. This reduced rate reflects the company’s relatively smaller reliance on Chinese state subsidies compared to its competitors.
The European Commission’s move comes after provisional tariffs imposed on July 5, which were introduced in response to an anti-subsidy investigation revealing that Chinese EVs were undercutting European rivals due to substantial state support. The commission has stated that the provisional duties, provided as bank guarantees, will be released once the definitive measures are finalized.
China has strongly opposed the proposed tariffs and has filed an appeal with the World Trade Organization (WTO). The European Commission remains confident that its measures comply with WTO rules and has said that it is open to negotiating alternative solutions if China can propose effective and WTO-compatible alternatives.
A commission official emphasized, “The EU is open to reaching a solution that would be effective and WTO compatible. We consider it very much up to China to come up with alternatives.”
China’s aggressive push into the EV market, bolstered by state subsidies and significant investments in research and development, has enabled its firms to offer more competitive and affordable vehicles compared to their European counterparts. Chinese EV exports surged by 70 percent in 2023, reaching $34.1 billion, with nearly 40 percent of these exports destined for the European Union.
