EU Set to Slap Up to 25% Additional Tariffs on China’s EVs

From July, the European Union is set to impose additional tariffs of up to 25% on imports of China-made electric vehicles as part of its investigation into anti-competitive Chinese subsidies for EVs, the Financial Times reported on Wednesday, quoting sources familiar with the European Commission’s decision.  

The Commission plans to slap provisional tariffs on imports of EVs made in China, depending on the car manufacturer and the extent of the competition-undermining subsidies the EU has identified in its ongoing investigation, according to FT’s sources.

The tariffs are set to raise more than $2.15 billion (2 billion euros) per year for the EU budget as Chinese sales of electric vehicles in Europe are growing, the FT notes.

France and Spain have spearheaded the decision to impose provisional tariffs, while Germany has opposed them arguing it would risk a trade war with China and ultimately make EVs more expensive.

German and other foreign automakers with production in China could also become subject to tariffs for their China-made vehicles in the EU. They also risk a Chinese retaliation with tariffs on other models in China.

EU member states are set to vote on tariffs on China-made EVs before early November.

France and Spain lead the effort to protect local EU manufacturing with tariffs, while Germany, Hungary, and Sweden are leading the opposition to the move, according to FT’s sources.

The EU launched in October 2023 anti-subsidy investigations into EU imports of EVs from China to determine whether the value chains in China benefit from illegal subsidies.

A potential EU tariff of 20% on China-made electric vehicles would cost China $3.8 billion worth of EV exports to the bloc, but it would also cost EU end-consumers “noticeably higher prices,” Germany’s Kiel Institute for the World Economy said in an analysis last month.    

By Tsvetana Paraskova for Oilprice.com

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