EU Sets Tariffs on Chinese EVs to Combat Market Distortion

The European Commission has announced the imposition of tariffs on battery electric vehicles (BEVs) imported from China, effective July 5, following an anti-dumping investigation. This move aims to protect European BEV manufacturers from the effects of substantial subsidies provided to Chinese BEV producers, which the Commission found to be distorting the market.

The European electric vehicle market is poised for significant growth, driven by regulations mandating a 100% reduction in CO2 emissions from new cars and vans registered in the EU by 2035, with similar rules in place in the UK. Currently, all-electric vehicles make up approximately 13% of the EU car market.

The tariffs come after the Commission launched an anti-subsidy investigation in October 2023, prompted by a surge in subsidized Chinese EVs that threatened the EU’s automotive sector. The investigation followed advocacy from France for an anti-dumping probe, despite concerns from countries like Germany about potential trade war repercussions.

In her State of the European Union address in September, EU Commission President Ursula von der Leyen highlighted the issue, stating that global markets were being inundated with cheaper Chinese electric cars due to significant state subsidies that kept prices artificially low.

The new tariffs impose individual duties on specific Chinese automakers, including BYD at 17.4%, Geely at 19.9%, and SAIC at 37.6%. Other BEV producers who cooperated with the investigation but were not sampled will face a 20.8% duty, while non-cooperating companies will be subject to a 37.6% duty.

This action mirrors similar measures taken by the United States, where the Biden administration increased tariffs on Chinese EVs to 100% in May, up from the previous 25%, and raised tariffs on lithium-ion EV batteries and parts from 7.5% to 25%. The U.S. measures aim to counteract China’s “unfair trade practices,” including forced technology transfers and intellectual property theft.

The European Commission has intensified consultations with China to find a World Trade Organization-compatible solution that addresses the EU’s concerns.