European Union votes to impose tariffs on Chinese electric vehicles

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October 4, 2024
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Employees work on an electric vehicle (EV) production line at the Leapmotor factory in Jinhua, China’s eastern Zhejiang province on September 18, 2024.

Adek Berry | Afp | Getty Images

The European Union on Friday voted to adopt definitive tariffs on China-made battery electric vehicles (BEVs).

“Today, the European Commission’s proposal to impose definitive countervailing duties on imports of battery electric vehicles (BEVs) from China has obtained the necessary support from EU Member States for the adoption of tariffs,” the EU said in a statement.

The EU first announced that it would slap higher tariffs on Chinese electric vehicle imports in June, on the grounds that they benefited “heavily from unfair subsidies” and posed a “threat of economic injury” to electric vehicle producers in Europe.

Duties were also disclosed for individual companies, depending on the extent of their cooperation with the probe. Provisional duties were put in place from early July, but were revised in September based on “substantiated comments on the provisional measures” from interested parties.

In a statement out Friday, the China Chamber of Commerce to the EU expressed “deep disappointment with this voting outcome,” adding that it is “strongly dissatisfied with the EU’s adoption of protectionist trade measures.”

The chamber also called on the EU to be “cautious” about final measures, to delay their implementation and to focus on finding solutions through negotiations. The EU had said Friday it was still looking for other solutions, even as the tariffs are adopted.

The Chinese Chamber of Commerce to the EU further reiterated its stance that the the bloc’s probe into Chinese EVs was “politically motivated and unjustified protectionist measure,” saying that higher duties would impact Chinese companies as well as international businesses producing EVs in China.

Industry response

German automakers criticized the EU’s decision.

Mercedes Benz called the tariffs a “mistake” and urged the European Commission to delay their implementation, while BMW said the move marked a “fatal sign” for Europe’s auto industry, Reuters reported.

Crisis-stricken Volkswagen meanwhile said that that duties were “the wrong approach and would not improve the competitiveness of the European automotive industry.”

The carmakers urged the EU Commission and Chinese government to continue talks, saying that the aim should be to “prevent any countervailing duties and thus a trade conflict.” An alternative, negotiated solution was still possible until the tariffs are implemented later this month, Volkswagen said.

Swedish auto maker Volvo Cars, which is owned by China’s Geely Holdings, said that it would “continue with our long-held strategy of building our cars where we sell them and have committed significant long-term investment into Europe,” according to a statement.

French-Italian conglomerate Stellantis meanwhile said the industry was facing pressure from plans to reduce C02 emissions and from Chinese competition, noting that, at this time “policies supporting the demand and ensuring stability of the rules are more important than ever.”

Autos stocks in Europe were last 1.42% higher at 12:19 p.m. London time.

Division in the EU

The decision follows months of debates and deliberations between EU members, which have expressed varying opinions on increasing tariffs.

While France has supported the measure after previously pushing the EU to start negotiations, Germany has advocated against the step, raising concerns about the consequences for its own struggling car makers.

Potential retaliation from China has been a key concern for some EU members, especially as China has already launched anti-dumping probes into pork and brandy exports from the EU, as well as an anti-subsidy investigation into EU dairy products.

German Finance Minister Christian Lindner on Friday urged the European Commission not to start a trade war.

“Despite the vote for potential punitive tariffs against China, Ursula von der Leyen’s EU Commission should not trigger a trade war. We need a negotiated solution,” he said in a post on social media platform X according to a CNBC translation.