The EU gives the definitive green light to the imposition of high tariffs on Chinese electric cars

The European Commission has given the green light definitive to the imposition of high tariffs on manufactured electric vehicles in China, officially closing the investigation started a year ago. Tariffs will apply starting Wednesday and will continue for the next five years.

Meanwhile, Brussels will continue negotiating with Beijing to try to reach an agreement on minimum prices that can replace tariffs. However, this solution, advocated by Germany, is very complex and would be difficult to implement on the ground.

“By adopting these measures provided and selective After a rigorous investigation, we defend fair market practices and the European industrial base,” said Valdis Dombrovskis, Executive Vice-President of the Trade Commission.

The entry into force was expected after the inconclusive vote at the beginning of the month, in which Member States failed to gather the necessary majority for or against the measures. The Commission invoked its commercial powers to unlock the situation and approve the rights, which are added to the current 10% rate and vary by brand, as noted below.

• Tesla: 7.8%.
• BYD: 17
• Geely: 18.8
• SAIC: 35.3%.
• Other Chinese electric vehicle manufacturers that cooperated in the investigation but have not been included in the sample: 20.7%.
• Other EV producers in China that did not cooperate: 35.3%

The Executive argues that the additional tariffs are necessary to offset the effects of subsidies that Beijing says it is injecting on a large scale into its domestic electric vehicle (EV) sector. Generous financial aid has allowed Chinese producers to sell their cars at artificially lower prices compared to their European competitors, the Commission attests.

As a result, the sales of electric vehicles from Chinese companies in Europe have increased at an extraordinary pace: its market share went from 1.9% in 2020 to 14.1% in the second quarter of 2024, according to Commission estimates.

Brussels has repeatedly warned that without strong action, EU carmakers would suffer unsustainable losses and be squeezed out of the lucrative net zero mobility market, leading to the closure of plants and the dismissal of thousands of workers. The bloc’s auto industry is already in crisis due to high energy prices, sluggish consumer demand and intense global competition.

“There is a clear and imminent threat that our car industry will not transition to electric vehicles and will therefore be wiped out,” a senior EU official, speaking on condition of anonymity, said Tuesday.

Despite the introduction of tariffs, Brussels says it maintains its commitment to find a solution with Beijing applicable through customs duties and compatible with the rules of the World Trade Organization (WTO), something that until now has proven elusive.

China denounced the investigation from the beginning of the Commission as a “naked protectionist act”, systematically denying the existence of subsidies, calling the conclusions “artificially constructed and exaggerated” and threatening retaliatory measures against the EU dairy, brandy and pork industries, which it did alarms go off in some capitals. “We did not agree on each and every fact that we established in the investigation,” the senior EU official stated. “It was a broad disagreement“.

but with USA and Canada imposing 100% tariffs to Chinese electric vehicles, Europe remains one of the few rich markets still available for Beijing’s high-end products.