EU to Move Ahead With New Tariffs on Chinese-Made EVs — Update

By Dominic Chopping

The European Union will impose tariffs of up to 45% on electric cars made in China, defying pleas from some European auto executives who fear retaliation from Beijing and an escalating trade war.

EU member states voted Friday on the new import fees that will apply for the next five years in a move aimed at protecting European carmakers from subsidized Chinese-made vehicles.

Under EU rules, its executive arm is allowed to move ahead with the tariffs unless a qualified majority of 15 countries representing 65% of the EU's population voted against the plan. It said Friday that it obtained the necessary support from EU member states for the adoption of tariffs, marking a step toward the conclusion of its year-long anti-subsidy investigation.

The European Commission has said the Chinese government unfairly subsidizes EV companies--including European carmakers who import EVs to Europe--at a level that undercuts competition, allowing carmakers in China to sell EVs for less than European-made vehicles.

But German car giant Volkswagen and others have come out against the tariffs, fearing reprisals from China that could include retaliatory import tariffs on European vehicles.

European carmakers including Volkswagen, BMW, Mercedes-Benz, and Stellantis all have a large presence in China, with most counting the country as their biggest market, but are battling fierce pricing and market-share pressure from homegrown manufacturers like BYD and Geely.

In Europe, a cooling EV market has also seen competition for customers intensify, especially as Chinese manufacturers have gained a foothold in the region and driven prices lower as they fight for a share of the market.

Chinese officials have spent recent weeks meeting with European leaders in an attempt to resolve the issue ahead of the decision, and although no deal was reached, EU officials said that Friday's decision isn't necessarily the final word on the matter, as the door remains open for a potential solution.

Martin Lucas, the Commission's director-general in charge of trade defense, said earlier this week that the conclusions of its yearlong investigation into China-made EVs are "not necessarily the end of consultations on finding a solution."

A decision on tariffs had to be made before the end of October, but solutions can still be accepted after that date, he said.

"The EU and China continue to work hard to explore an alternative solution that would have to be fully World Trade Organization-compatible, adequate in addressing the injurious subsidization established by the Commission's investigation, monitorable and enforceable," the Commission said in a statement Friday.

According to the Commission, the share of EV imports into the EU from China rose to 27.2% in the second quarter of 2024 from 3.5% in 2020, while EVs imported by Chinese brands alone, rather than through joint ventures, rose to 14.1% in the second quarter of this year from 1.9% in 2020.

The EU duties announced Friday range from 7.8% to 35.3% and will come on top of the EU's existing standard 10% import duty on all imported cars, therefore bringing the total tariff that some manufacturers will pay to just more than 45%.

The U.S. and Canada have imposed a 100% tariff on Chinese EV imports.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

October 04, 2024 06:16 ET (10:16 GMT)

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