The European Commission has confirmed the implementation of additional tariffs on electric vehicles (EVs) manufactured in China, proceeding with the measures as initially planned, despite ongoing negotiations with Chinese officials aimed at finding a mutually agreeable solution.
The Commission’s decisive action officially culminates a comprehensive investigation that commenced one year ago, granting the final approval for significant tariffs on Chinese-made EVs.
Effective Wednesday, these tariffs will be enforced for a duration of five years, representing a critical step in the EU’s defense of its automotive industry.
In parallel, Brussels is set to continue its discussions with Beijing, seeking to establish a pricing agreement that could potentially eliminate the need for tariffs. This alternative solution, promoted particularly by Germany, poses significant challenges in terms of practical implementation and complexity.
Valdis Dombrovskis, the Commission’s executive vice-president overseeing trade matters, stated, “By adopting these proportionate and targeted measures after a rigorous investigation, we’re standing up for fair market practices and for the European industrial base,” emphasizing the importance of a level playing field.
The entry into force of these tariffs was anticipated following a recent inconclusive vote among EU member states, which failed to reach the necessary majority to either support or oppose the proposed measures. To circumvent the deadlock, the Commission exercised its trade mandates to enact the tariffs, augmenting the existing 10% duty with variable rates according to different automobile brands:
- Tesla: 7.8%
- BYD: 17%
- Geely: 18.8%
- SAIC: 35.3%
- Other EV producers in China who cooperated in the investigation but have not been individually sampled: 20.7%
- Other EV producers in China who did not cooperate: 35.3%
The European Commission insists that implementing additional tariffs is essential to counterbalance what it perceives as substantial government subsidies from Beijing that favor China’s domestic EV industry. These extensive financial incentives have enabled Chinese manufacturers to undercut their European counterparts, significantly impacting the market landscape.
As a result, the sales of Chinese EVs within Europe have surged dramatically, with their market share escalating from a mere 1.9% in 2020 to an impressive 14.1% by the second quarter of 2024, based on estimates provided by the Commission.
Brussels has repeatedly cautioned that failing to take decisive action could lead to catastrophic consequences for EU carmakers, risking unsustainable losses, the closure of manufacturing facilities, and the potential layoffs of thousands of workers amid a rapidly evolving market for net-zero mobility solutions.
The bloc’s automotive sector is presently experiencing significant turmoil driven by elevated energy costs, lackluster consumer demand, and fierce competition in the global marketplace.
“There’s a clear and imminent threat to our car industry not making the transition to electric vehicles and being therefore wiped out,” a senior EU official expressed on Tuesday, highlighting the urgency of the situation while speaking under the condition of anonymity.
Despite the implementation of these tariffs, Brussels has reaffirmed its commitment to pursuing a viable resolution with Beijing that could be enforced through customs duties and align with World Trade Organization (WTO) regulations, although achieving such an outcome remains a challenging endeavor.
In response to the Commission’s investigation, China has characterized the findings as a “naked protectionist act,” consistently rejecting any claims of subsidies and labeling the evidence “artificially constructed and exaggerated.” Additionally, Beijing has indicated potential retaliatory measures targeting the EU’s dairy, brandy, and pork sectors, raising concerns among European leaders.
“We disagreed on each and every fact that we established in the investigation,” the senior EU official remarked. “It was a broad disagreement,” underscoring the contentious nature of the discussions.
With both the United States and Canada imposing 100% tariffs on Chinese EVs, Europe remains one of the few affluent markets still accessible to Beijing’s high-end electric vehicle offerings.