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Tariffs on electric cars imported from China have been hiked by the European Union drawing a rebuke from Beijing, which sees the bloc as a vital and growing market for its auto industry.
The new tariffs of between 17.4% and 38.1% will come on top of the existing EU tariff of 10%, according to a statement from the European Commission. That takes the highest overall duty to close to 50%.
The provisional decision follows an investigation into China’s state support for electric vehicle makers. The European Commission, the EU’s executive arm, launched the probe in October to establish whether Chinese EV prices are artificially low because of subsidies and so hurt European carmakers.
The Commission said its investigation had provisionally concluded that the EV industry in China “benefits from unfair subsidization, which is causing a threat of economic injury.”
The sharp increase in tariffs highlights the more protective stance on trade with China that Brussels and Washington are adopting. Western officials are concerned that jobs and strategically important industries could be wiped out by cheap Chinese imports. The EU is also probing China’s support for wind turbine companies and solar panel suppliers.
The Commission has applied differing levels of duties to three major EV makers. BYD — which jostles with Tesla (TSLA) for position as the world’s biggest seller of battery EVs — has the lowest additional duty at 17.1%.
Geely, which owns Sweden’s Volvo, has been hit with an extra 20% tariff and SAIC with another 38.1%. As for other EV makers in China, those that cooperated with the EU investigation will see a 21% additional duty, while those that did not will be subject to an extra 38.1% duty.
Tesla, which manufactures many of its cars in China, could receive an “individually calculated duty rate” at a later stage “following a substantiated request” lodged by the carmaker, the Commission said.
The new EV tariffs are likely to kick off intense negotiations between Beijing and Brussels aimed at averting a damaging trade war. The EU must decide by November whether to adopt the tariffs permanently.
Responding to the EU announcement, China’s Ministry of Commerce accused the bloc of “creating and escalating trade tensions” and said the move would hurt European consumers. It vowed in a statement to take “all necessary measures to firmly defend the legitimate rights and interests of Chinese companies.”
Lewis Musonye
