The European Union has announced that it will be implementing tariffs on Chinese-made electric vehicles starting next month. This decision comes as the latest development in an ongoing trade dispute between Europe, the United States, and China. The tariffs, which will range up to 38.1%, will be in addition to an existing tariff of 10%. This decision was made following an investigation by the European Commission into whether the Chinese government was providing subsidies for their production of electric vehicles.
The Commission has stated that it intends to engage in discussions with Chinese authorities regarding this issue. However, if a solution is not reached, the tariffs will go into effect on July 4th. The impact of these tariffs will be felt by some of China’s largest car companies, such as BYD, MG’s owner SAIC, and Geely.
This move by the European Union follows a similar decision made by the United States last month, which had a much broader scope. The sheer magnitude of the impact of Chinese electric vehicles on the global market has been a point of contention for months. The Commission has accused China of saturating the market with electric vehicles at such low prices that other countries are unable to compete.
The decision to impose tariffs has been met with opposition from major manufacturers, including Mercedes and BMW, as it runs the risk of triggering retaliatory action from China. China’s foreign ministry spokesman, Lin Jian, has responded to the decision, stating, “This anti-subsidy investigation is a typical case of protectionism.” China maintains that affordable electric vehicles, solar panels, and lithium batteries are essential for the world to transition to a clean energy future.
The European Union is walking a delicate line in managing its trade relationship with China. Countries like Germany, which have a strong presence in the car manufacturing industry, rely on access to the Chinese market to sell their vehicles. Brands like Volkswagen and BMW are highly popular in China. However, with the rise of locally made Chinese cars that are technologically advanced and well-made, Germany is understandably concerned.
The United States has also taken action in this trade dispute, announcing a 100% tariff on Chinese electric vehicles last month. This move serves as a strong message that the US will not allow China to dominate the market. During a visit to Beijing in April, US Secretary of State Antony Blinken stated that China is producing “more than 100% of global demand” for electric vehicles, solar panels, and batteries. He added, “this is a movie that we’ve seen before, and we know how it ends.”
China, on the other hand, has also been in this position before. When it became the world’s leading producer of consumer products, its competitors claimed it was unfair. Chinese President Xi Jinping is aware that a new strategy is needed, especially with the real estate sector facing challenges. He is placing his bets on the manufacturing of new green technology products as a means of boosting the economy. This includes the continued production of electric vehicles.
With the UK closely watching developments in this trade dispute, there are concerns that they may also consider implementing tariffs on Chinese electric vehicles. However, Ian Plummer, commercial director of Auto Trader, has expressed disappointment in the European Union’s decision, stating, “We hope the UK isn’t tempted to take similar action.” Plummer believes that limiting options for affordable electric cars would not make sense and that more buyers need to be brought into the market by reducing the “green premium.” This refers to the common issue of electric vehicles being 35% more expensive than traditional diesel or petrol cars.