Chinese Car Companies Demand 25% Tax on European Vehicles

Chinese car companies have called on their government to impose import taxes of up to 25% on European Union (EU) rivals if the bloc follows through with its threat to impose tariffs on Chinese electric vehicles (EVs), according to state media reports. The demand was reportedly made during a closed-door meeting organized by China‘s Ministry of Commerce, which was attended by representatives from both Chinese and European car firms.

The proposed measures would target EU cars with large petrol-driven engines. Last week, the EU threatened Chinese EV makers with tariffs of up to 38% starting from July 4th. The meeting in Beijing was attended by four Chinese and six European car companies, including Volkswagen, which confirmed its presence but declined to comment on the discussions.

EU and US Tariffs Spark Retaliation from China

The EU’s governing European Commission (EC) announced last week that it had “provisionally concluded” that Chinese EV manufacturers will face tariffs “should discussions with Chinese authorities not lead to an effective solution.” Cooperating firms will face an average 21% duty, while non-cooperating ones could face a 38.1% tariff. These charges would be in addition to the current 10% tariff on all electric cars produced in China.

The EU’s intervention follows the US’s bold move last month, raising its tariff on Chinese electric cars from 25% to 100%. The Chinese government has denounced these decisions as protectionism and has begun taking retaliatory measures, including launching investigations into imports of European pork products and chemicals from the EU and US.

Impact on Luxury Car Market

According to Bill Russo from advisory firm Automobility, the proposed 25% tariffs would target “luxury or ultra luxury” vehicles, meaning “an additional tax is not likely to make much of a difference on volumes.”

EVXL’s Take

The escalating trade tensions between China, the EU, and the US have significant implications for the global automotive industry, particularly in the rapidly growing EV sector. As major players in the market, Chinese car companies are understandably concerned about the potential impact of EU tariffs on their competitiveness.

However, it is important to note that retaliatory measures, such as the proposed 25% tax on European vehicles, may not have a substantial effect on sales volumes in the luxury car segment. Nonetheless, these tit-for-tat actions could further strain international trade relations and hinder the development of a more sustainable, electric-powered future for transportation.

As the world continues to shift towards EVs, it is crucial for governments and industry leaders to find common ground and work together to promote innovation, affordability, and accessibility in this transformative sector. Only through cooperation and open dialogue can we hope to achieve a cleaner, greener future for all.