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China decries new EU tariffs on its electric vehicles

30 Oct 2024 By OUR CORRESPONDENT

Beijing, China – The EU has increased tariffs on electric vehicles (EVs) imported from China, raising them up to 45.3%. China has condemned the decision, with Germany and Hungary, both EU members, also voicing criticism. The European Commission argues that China’s excess production capacity of approximately three million EVs per year is double the size of the EU market.

The European Union (EU) increased tariffs on EVs made in China to as much as 45.3% on Wednesday after unsuccessful negotiations with China. The bloc formally approved tariffs on Tuesday ranging from 7.8% to 35.3%, in addition to the EU’s standard 10% car import duty. Beijing stated it had lodged a complaint with the World Trade Organisation over the measure.

Why is the EU imposing tariffs?

The EU argues that Chinese subsidies undermine competitiveness within the EU. The European Commission highlighted preferential financing, grants, and below-market prices for land, batteries, and raw materials offered to Chinese companies. The US and Canada have already imposed 100% tariffs on Chinese EVs, leaving Europe as the primary market for these vehicles.

EU trade chief Valdis Dombrovskis remarked on Tuesday, “By adopting these proportionate and targeted measures after a rigorous investigation, we’re standing up for fair market practices and for the European industrial base.” He added, “We welcome competition, including in the electric vehicle sector, but it must be underpinned by fairness and a level playing field.”

How has China reacted?

The tariffs were implemented after negotiations between the bloc and China on EV pricing failed, though another round of talks is expected soon. The EU Commission indicated “significant remaining gaps” in the discussions. China has opposed the tariffs, with the Ministry of Commerce declaring, “China does not agree with it and will not accept the ruling,” pledging to take necessary steps to protect the rights and interests of Chinese companies.

The tariffs impact different Chinese-built vehicles at various rates. For instance, foreign cars manufactured in China, such as Tesla, face a 7.8% tariff. Chinese car giant Geely faces an 18.8% tariff, while the state-owned company SAIC is subject to the highest rate of 35.3%. The Chinese Chamber of Commerce to the EU has urged Brussels and Beijing to “accelerate talks on establishing minimum prices and, ultimately, to eliminate these tariffs.”

China has also announced retaliatory measures, planning to impose provisional tariffs on European brandy and investigating EU subsidies on certain dairy and pork products sold in China.

EU division over tariffs

Within the EU, there is a split on the tariffs, with five of the 27 member states voting against and 12 abstaining. Germany, a major automobile producer, is a notable opponent. The head of Germany’s auto industry association (VDA) described the tariffs as “a setback for free global trade and thus for prosperity, the preservation of jobs, and Europe’s growth.”

Germany’s Economy Ministry reiterated on Tuesday that Berlin “stands for open markets, as Germany, in particular, relies on this due to its globally interconnected economy.” German car manufacturers have expressed concern over possible higher Chinese import duties on large-engined petrol vehicles, which could significantly affect them. Hungary, where China is building new EV plants, also opposed the tariffs, while France has shown strong support.

The tariffs are set to last for five years unless a resolution is reached.

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