——- Move attracts stern reaction from Beijing
DM Monitoring
BRUSSELS: The European Commission 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 EVs to 100%, Brussels said it would combat excessive subsidies with additional tariffs ranging from 17.4% for BYD (002594.SZ), opens new tab to 38.1% for SAIC (600104.SS), opens new tab, 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 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 says 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 (BMWG.DE), opens new tab 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 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 U.S. or EU impose tariffs on exports of the world’s No. 2 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.
