Europe starts retracting duties on Chinese-made models

The EU might ease duties for German manufacturers in China. A final decision is expected in autumn

EU lowers duties for BMW and Volkswagen

By: Alberto Carmone

Published by: Brian Potter

Jul 18, 2024 at 7:29am ET

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There is already a partial U-turn by the European Union on duties concerning electric vehicles produced in China. According to a report by Automotive News Europe, the European Commission has informed Volkswagen and BMW that it is considering reducing tariffs on their battery-powered models made in China.

In particular, the Commission would be willing to classify the two manufacturers as so-called 'cooperating companies', which would make them eligible for a 20.8 per cent tariff on their Chinese-made models, compared to a 37.6 per cent duty under the current regulation.

The situation of MINI and Cupra

Among the most heavily penalised models of the two brands are the electric MINI and the Volkswagen Group's Cupra Tavascan, which are currently affected by the highest level of tariffs.

If approved, this would be a first compromise on the part of Brussels, which with the duties is hitting not only Chinese manufacturers, but also several European brands.

MINI Cooper SE

Cupra Tavascan

It is no coincidence that the German automotive industry has opposed the tariffs because it fears retaliation from China, where German brands generated a third of their revenues last year.

At the moment, Volkswagen and BMW have not commented on these advances as reported by Automotive News Europe, but the impression is that much more time will be needed for clarity.

In fact, Brussels has until this autumn to make a final decision on the duties, which for the time being are provisional and based on a number of parameters such as low-interest loans granted to Chinese manufacturers, direct state incentives to brands and aid for battery production.

The appeal of the automotive world

In general, the European automotive industry has made its voice heard against the EU in recent weeks.

31 associations have approached Strasbourg and Brussels to propose an 'ambitious and open trade policy in support of the EU's competitiveness and economic prosperity', according to the letter published on the Acea (European Automobile Manufacturers' Association) website.

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The call is to keep openness and growth as fundamental components of EU trade policy, avoiding any kind of barrier.

The appeal, therefore, is to take a step back in the trade war with China. In addition, the associations also call for the appointment of a dedicated Trade Commissioner to oversee this exclusive EU competence and urge Europe to still support the WTO (World Trade Organisation).