China calls it protectionism, German auto industry fears disadvantages.
Starting today, the EU’s special tariffs on electric vehicles made in China are in effect. The union justifies the measure with claims of unfair competitive advantages due to state subsidies, which include tax breaks as well as state-provided components and raw materials at prices below market value. About a year ago, the European Commission launched an anti-subsidy investigation, which it announced yesterday had concluded positively. On the same day, the tariffs were published in the EU’s Official Journal to take effect the following day.
The measure is set to last five years. According to the EU, specific tariff rates are 17% for BYD, 18.8% for Geely, 35.3% for SAIC, and 20.7% for other cooperating companies. Non-cooperating automakers face a 35.3% tariff, while the U.S. company Tesla, which also manufactures in China, will face a 7.8% tariff upon “justified request” and individual review.
In parallel, the EU announced it is working with China on an alternative solution that complies with World Trade Organization (WTO) rules and is open to negotiations with individual exporters. Importers can also request a refund if they believe the relevant company is not receiving subsidies, but they must provide supporting evidence.
German Automotive Industry: Concern Over Trade Conflict
Earlier this month, a sufficient majority of EU countries voted in favor of the tariffs, reports German news channel ZDF, with Germany voting against them. China is a key market for the German auto industry, with some German manufacturers producing there for export. The industry has thus criticized the tariffs’ introduction. The German Association of the Automotive Industry on Tuesday called it a “setback for free global trade and, consequently, for prosperity, job security, and growth in Europe.” The punitive tariffs, it warned, increase the risk of an extensive trade conflict.
As expected, sharp criticism also came from China itself. According to the state-affiliated Global Times, China does not recognize the EU’s decision on the anti-subsidy investigation and has filed a complaint with the WTO. China, in turn, accused the EU of “unfair trade protectionism.” Seen as a possible response, China has imposed a levy on European-made brandy and is continuing an anti-dumping and anti-subsidy investigation regarding EU pork.
More on China’s electric vehicle market: Our background report explores how the country became the largest producer and market for electric vehicles, with comparisons to other major EV markets in the U.S. and Germany.
Photo: iStock/Lucia Gajdosikova