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The EU is pushing ahead with tariffs of up to 45 per cent on Chinese electric vehicles, sharply escalating the trade war between the 27-member bloc and Beijing over allegations of unfair industrial subsidies.
The tariffs, which come into force on Wednesday and will be imposed for five years, come after the EU rejected China’s claims that it was introducing protectionist measures without evidence that Chinese vehicles were receiving undue state support. The new duties also come on top of an existing 10 per cent tariff on Chinese car imports in the bloc.
The two sides said they would continue talks, including over the introduction of “minimum prices” for Chinese-made vehicles sold in Europe. That level would have to be high enough to compensate for the “injurious subsidisation” that Chinese manufacturers received and which allowed them to undercut European rivals, an EU official said.
China’s commerce ministry said in a statement on Wednesday that Beijing would “continue to take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies”. It added that it hoped Brussels could work with Beijing in a “constructive manner” to resolve the dispute through dialogue.
The EU’s decision to impose additional duties on Chinese-made EVs followed the conclusion of a months-long investigation launched by commission president Ursula von der Leyen last year into China’s allegedly unfair support for its EV industry.
Beijing has repeatedly criticised Brussels over the investigation and tariff rises, arguing the European actions violate international trade rules and threaten global progress on fighting climate change.
The EV tariffs have caused deep divisions in the bloc, with strong opposition from member states including Germany and Hungary. Diplomats have warned that EU countries that export to China are bracing for further retaliation from Beijing.
A spokesman for German Chancellor Olaf Scholz said on Wednesday that Berlin was pushing for a negotiated solution because of the risk of retaliation.
“Such trade conflicts are not something we should strive for and in this respect the clear expectation towards Brussels, but also towards Beijing, is that good results will be achieved in the ongoing talks so that a trade conflict can be averted,” he said.
The introduction of the duties also comes at a vulnerable time for the EU car industry, which has struggled to compete with the aggressive expansion of low-priced Chinese EVs in the bloc. Except for Renault, all the major European car manufacturers have issued profit warnings this year.
Volkswagen, Europe’s biggest car manufacturer, is planning to shut at least three German plants and shed tens of thousands of jobs as part of a cost-cutting drive.
Along with high energy costs and challenging regulation linked to the EU’s green transition, the industry is contending with a significant increase in the number of cheaper Chinese models reaching the market. The commission has insisted it is introducing tariffs to ensure a level playing field in Europe rather than to restrict trade with China.
The tariffs were first announced in June, with four companies — China’s BYD, Geely and SAIC and Tesla of the US — allocated individual duties that ranged from 7.8 per cent for Tesla to 35.3 per cent for SAIC, according to the level of subsidies they received from Beijing.
All other manufacturers that co-operate with Brussels by providing requested information will be hit with a tariff of 20.7 per cent. Those that do not face a 35.3 per cent levy.
“We can safely say that we basically disagreed on each and every fact, each and every legal argument that we have established in the investigation,” an EU official said.
China has already said it will impose anti-dumping measures on EU brandy imports and has launched probes into EU imports of pork and dairy products since the EV tariffs were announced.
Beijing also raised a complaint at the World Trade Organization after the tariffs were provisionally announced, calling the investigation “protectionist in nature” and claiming an “absence of any concrete evidence regarding alleged subsidisation in China”.
The EU has said the WTO complaint is now void since the tariffs were marginally reduced after the investigation ended.
The China Chamber of Commerce to the EU “expressed profound disappointment” over the commission’s decision to proceed with the tariffs, telling the Financial Times it was “disheartened by the lack of substantive progress in negotiations”.
But an EU official confirmed prices were unlikely to rise immediately for consumers. “There is a big chance that if a consumer bought a car now, it would be bought from stock [already] on the EU market,” the official said.
Additional reporting by Gloria Li in Hong Kong and Laura Pitel in Berlin
Source: Economy - ft.com
