Europe ready to raise tariffs on Chinese electric cars

According to the Financial Times, duties will increase by 25 per cent as of July 2024

Le bandiere di Cina ed Europa

By: Massimo Grassi

Published by: Brian Potter

Jun 12, 2024 at 6:19am ET

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The throw of the dice of duties on Chinese electric cars has been cast. According to reports in the Financial Times, Brussels has decided to increase taxation on imports of Chinese plug-in vehicles into the Old Continent, raising it from 10 per cent to a maximum of 35 per cent.

While waiting for an official communication, expected this afternoon, the manufacturers of the People's Republic have already been informed and it needs to be understood what countermeasures will be taken by the eastern giants.

Why the duties

The European Commission's move is a response to suspicions, confirmed by an investigation lasting months, of state subsidies by China to its manufacturers, such as a direct transfer of financial resources, loans, the opening of credit lines and other instruments to favour the production and export of electric cars at particularly low prices - actions summed up in the term 'dumping'.

As mentioned, it is not yet official, but in recent months the hypothesis has been floated several times, with dry answers from the Chinese leadership, irritated by the increase in duties on the export of electric cars. Foreign Ministry spokesman Lin Jian announced countermeasures to 'firmly defend' the rights of Chinese manufacturers, adding that the tariff increase would violate market economy principles. "We urge the EU to uphold its commitment to support free trade, oppose protectionism and work with China to safeguard overall bilateral economic and trade cooperation."

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The issues

The tariff increase on Chinese electric cars imported into Europe is expected to start on 1 July 2024 and will be retroactive, thus also affecting vehicles that entered the Old Continent between April and June. The planned duration is five years, but it will be necessary for the 27 Member States to agree by 2 November to ratify the measure.

Not an easy mission for the new European Commission, which will have to reckon with internal divisions. If in fact some countries such as France and Spain have always supported the need to increase duties, on the other hand Germany, Sweden and Hungary believe that the move could be risky and counterproductive. China could in fact adopt countermeasures that would impose higher duties not only on European cars, but also on other products from the Old Continent.

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