Chinese EV Makers Brace for EU Tariffs Amid Tense Bilateral Relations

The European Commission is set to impose provisional duties on Chinese electric vehicles (EVs) from July 4, according to EU officials. This move comes as a result of an investigation into subsidies in China‘s EV industry, which has strained the already tense China-EU relationship, reports SCMP.

During a meeting with the EU’s department of trade in Brussels on Monday, Chinese businesses were informed about the upcoming provisional duties. However, the tariff rate was not disclosed and will be privately communicated to companies next week.

The probe, launched in October by European Commission President Ursula von der Leyen, has been a contentious issue between the EU and China. Supporters of higher duties argue that they are necessary to protect the EU’s automotive industry and address data harvesting concerns. On the other hand, free-traders and environmentalists oppose the duties, claiming they would distort markets and hinder the bloc’s efforts to transition away from combustion engine cars.

Brussels faces the challenge of applying a countervailing duty that balances out the level of subsidies found in the Chinese economy while not appearing to abandon its commitment to the EU’s Green Deal. Experts predict that a tariff rate below 50% may not effectively deter Chinese EV imports, given the higher duties in other markets like the United States.

China has strongly opposed the investigation and threatened to target EU aviation, food exports, and launch an anti-dumping probe into EU-made brandy imports. Chinese Commerce Minister Wang Wentao and Vice-Minister Ling Ji are currently touring Southern European countries to discuss the EV probe.

The impending EU tariffs on Chinese EVs have further strained the already tense China-EU relationship. Both sides face a balancing act in navigating this issue, with the EU aiming to protect its automotive industry while maintaining its commitment to the Green Deal, and China seeking to safeguard the interests of its enterprises.

EVXL’s Take:

The EU’s decision to impose tariffs on Chinese EVs highlights the growing tensions in the global EV market. As countries seek to protect their domestic industries and address concerns over subsidies and data harvesting, it is crucial to find a balance that promotes fair competition and encourages the adoption of clean energy vehicles. The drone industry, which relies on similar technologies and supply chains, should closely monitor these developments and advocate for policies that foster innovation and collaboration across borders.

Photo courtesy of Bloomberg