The European Union has recently announced new import tariffs on Chinese-made electric vehicles, with rates reaching up to 38%. This decision comes after an anti-subsidy investigation that revealed market-distorting subsidies in the EV supply chain in China. The new rates represent a significant increase from the previous 10% import duty that was in place across the board.
Among the affected companies, EVs made by BYD, the world’s largest battery electric vehicle company, will now face a tariff rate of 17%, down from the initial 17.4%. Similarly, Geely-made EVs will see a decrease from 20% to 19.3%. However, 17 companies that were found to have cooperated with the EU’s probe will face a slightly higher rate of 21.3%, up from 20.8%. Non-cooperating companies will be subject to the highest rate of 36.3%.
The European Commission has decided not to collect the provisional tariffs that were imposed last month until the more permanent rates are written into EU law. This must be completed by October 30, with the new rates taking effect the following day. Additionally, the commission has opted not to retroactively collect backdated tariffs, a move that had been considered earlier in the year.
In a bid to encourage cooperation between Chinese firms and EU companies, reduced tariffs of 21.3% will be offered to companies that have launched EV joint ventures with EU counterparts since the initial probe began in September 2023. This includes vehicles like the Cupra Tavascan, produced by a joint venture between Volkswagen and Chinese company JAC Group.
The proposal for the definitive tariff rates will be voted on by the EU’s 27 member states in October and will be enforced for a period of five years. The rates could still be subject to change, and carmakers have a 10-day window to submit their views following the announcement of the plans.
Despite ongoing technical talks between the EU and Beijing, the likelihood of reaching a deal remains uncertain. EU officials have expressed doubts about China’s willingness to address the issue of subsidies, with China disputing the findings of the EU’s probe. Last week, the Chinese government lodged a complaint at the WTO, signaling a potential escalation in the dispute.
Overall, the imposition of import tariffs on Chinese-made electric vehicles reflects the EU’s efforts to address market-distorting subsidies and level the playing field for all companies in the EV sector. The outcome of the ongoing discussions between the EU and China will have significant implications for the future of trade relations between the two economic powerhouses.